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As filed with the Securities and Exchange Commission on June 21, 2005
Registration No. 333-125549
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 1
To
Form S-11
FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933
OF CERTAIN REAL ESTATE COMPANIES
American Campus Communities, Inc.
(Exact Name of Registrant as Specified in Its Governing Instruments)
805 Las Cimas Parkway, Suite 400
Austin, TX 78746
(512) 732-1000
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
William C. Bayless, Jr.
President and Chief Executive Officer
805 Las Cimas Parkway, Suite 400
Austin, TX 78746
(512) 732-1000
(Name, Address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
     
Bryan L. Goolsby
Toni Weinstein
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
Telephone: (214) 740-8000
Facsimile: (214) 740-8800
  Edward F. Petrosky
J. Gerard Cummins
Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
         Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
         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 of 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, please check the following box.    o
CALCULATION OF REGISTRATION FEE
                   
                   
                   
            Proposed Maximum     Amount of
Title of Each Class of     Amount to Be     Aggregate     Registration
Securities to Be Registered     Registered     Offering Price(1)     Fee(2)
                   
Common Stock, par value $.01 per share
    3,910,000     $85,883,150     $10,109
                   
                   
(1)  Estimated pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon the average of the high and low sales prices of a share of common stock as reported on the New York Stock Exchange on June 17, 2005.
(2)  A registration fee of $8,828 was previously paid in connection with the filing of the registration statement on June 6, 2005. A fee of $1,281 has been paid in connection with the filing of this Amendment No. 1.
          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, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
 


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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. The prospectus is not an offer to sell the 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 June 21, 2005
PROSPECTUS
(AMERICAN CAMPUS LOGO)
3,400,000 Shares
American Campus Communities, Inc.
Common Stock
     We are one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned, managed and developed. This is a public offering, or Offering, of 3,400,000 shares of our common stock. We will receive all of the cash proceeds from the sale of these shares. Our common stock is listed on the New York Stock Exchange under the symbol “ACC.” On June 17, 2005, the last reported sales price of our common stock on the New York Stock Exchange was $21.97 per share. We intend to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with our tax year ended December 31, 2004.
      See “Risk Factors” beginning on page 18 for certain risk factors relevant to an investment in our common stock, including, among others:
  As of March 31, 2005, our total consolidated indebtedness was approximately $309.4 million (excluding unamortized debt premiums). Our debt service obligations expose us to the risk of default and reduce (or eliminate) cash resources that are available to operate our business or pay distributions, including those necessary to maintain our REIT qualification. There is no limit on the amount of indebtedness that we may incur except as provided by the covenants in our revolving credit facility.
 
  Our results of operations are subject to annual re-leasing, seasonality and other risks that are unique to the student housing industry.
 
  •  We have been recently organized and have a limited operating history. Our management has limited experience in running a public company or in operating in accordance with the requirements for qualification as a REIT.
 
  Provisions of our organizational documents limit the ownership of our shares.
 
  If we fail to qualify as a REIT for federal income tax purposes, our distributions will not be deductible by us, reducing our cash available for distribution to our stockholders.
 
  We may not be able to make distributions to our stockholders in the future, and we may make distributions that include a return of capital.
     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.
                 
    Per Share   Total
         
Public offering price
  $       $    
Underwriting discount
  $       $    
Proceeds, before expenses, to us
  $       $    
     To the extent the underwriters sell more than 3,400,000 shares of our common stock, they will have an overallotment option to purchase up to an additional 510,000 shares from us at the public offering price less the underwriting discount.
     The underwriters expect to deliver the shares on or about                   , 2005.
Citigroup Deutsche Bank Securities
JPMorgan
  KeyBanc Capital Markets
  Wachovia Securities
  RBC Capital Markets
The date of this prospectus is    , 2005


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    F-1  
 Form of Underwriting Agreement
 Opinion and Consent of Locke Liddell & Sapp LLP
 Opinion and Consent of Locke Liddell & Sapp LLP
 Consent of Ernst & Young LLP
 
You should rely only on the information contained in this document. We have not authorized anyone to provide you with any additional or different information. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.
 

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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed information regarding us and our historical and pro forma financial statements appearing elsewhere in this prospectus, including under the caption “Risk Factors.” References in this prospectus to “we,” “our,” “us,” “our Company” or like terms when used in the present tense, prospectively or for historical periods since August 17, 2004 (the date of the consummation of the initial public offering, or “IPO,” of our common stock) refer to American Campus Communities, Inc., a Maryland corporation, together with our consolidated subsidiaries. These consolidated subsidiaries include American Campus Communities Operating Partnership LP, a Maryland limited partnership of which we are the parent of the general partner and which we sometimes refer to in this prospectus as our “Operating Partnership,” and American Campus Communities Services, Inc., a Delaware corporation and wholly owned subsidiary of our Operating Partnership, which is our taxable REIT subsidiary and which we sometimes refer to in this prospectus as our “TRS.” References to the “Predecessor Entities,” “Predecessor owners,” “predecessors,” “we,” “our,” us,” “our Company” or like terms when used for historical periods prior to August 17, 2004 refer to our predecessor entities, which were a combination of real estate entities under common ownership and voting control collectively doing business as American Campus Communities, L.L.C. and Affiliated Student Housing Properties. Unless otherwise indicated, the information contained in this prospectus is as of March 31, 2005 and assumes that the underwriters’ overallotment option has not been exercised and the common stock to be sold in this Offering has been sold at $21.97 per share, which was the last reported sales price of our common stock on the New York Stock Exchange on June 17, 2005.
Our Company
We are one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned, managed and developed. As of March 31, 2005, we owned and/or managed 43 student communities consisting of approximately 26,900 beds in approximately 9,700 units. We are a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties.
As of March 31, 2005, our owned property portfolio consisted of 24 high-quality student housing properties, containing approximately 15,600 beds in approximately 5,200 units. We acquired 16 of these properties and developed the remaining eight properties. We manage all 24 of our owned properties. Nineteen of our 24 owned properties are located off-campus in close proximity to 22 colleges and universities in nine states, and five of these properties are located on-campus, where we manage and participate in their ownership and management through ground/facility leases with two university systems. We refer to these five on-campus properties as our on-campus participating properties. Our owned property portfolio contains modern housing units, offers resort-style amenities and is supported by a classic resident assistant system and other student-oriented programming.
We are also one of the nation’s leaders in providing third party services to colleges and universities for the management and development of on-campus student housing. We manage 19 properties on a third party basis primarily for colleges, universities and financial institutions. These third party managed properties contain approximately 11,300 beds in approximately 4,500 units. In addition, since 1996, we have been awarded more than 30 on-campus development projects, resulting in strong relationships with some of the nation’s preeminent university systems.
We have driven innovation in the student housing industry, establishing our company as a premier owner, manager and developer in the sector. In 2004, we became the first publicly traded REIT focused solely on student housing properties. Today, operating as a fully integrated, self-managed and self-administered equity REIT, our unique and singular focus has not changed: Student housing is our core business.
Our principal executive offices are located at 805 Las Cimas Parkway, Suite 400, Austin, Texas 78746. Our telephone number at that location is (512) 732-1000. Our website is located at

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www.studenthousing.com or www.americancampuscommunities.com. The information on our website is not part of this prospectus.
Recent Activities
Since our IPO in August of 2004, we have had substantial growth activities.
Acquisitions
We have acquired seven properties totaling 3,118 beds in 978 units for an aggregate purchase price of approximately $120.2 million. In connection with these acquisitions, we assumed approximately $47.2 million of mortgage debt. Each of these acquisitions is described below.
In March 2005, we acquired an off-campus student housing property (Exchange at Gainesville, to be renamed) consisting of 1,044 beds in 396 units, near the University of Florida campus in Gainesville, Florida, for a purchase price of $47.5 million. We entered into a fixed-rate mortgage loan in the amount of $38.8 million in connection with this acquisition.
In March 2005, we acquired an off-campus student housing property (City Parc at Fry Street) consisting of 418 beds in 136 units, located near the University of North Texas in Denton, Texas, for a purchase price of $19.2 million. We assumed approximately $11.8 million of fixed-rate mortgage debt in connection with this acquisition.
In February 2005, we acquired a portfolio of five off-campus student housing properties (the “Proctor Portfolio”) for a purchase price of approximately $53.5 million. Four of the properties are located in Tallahassee, Florida and one property is located in Gainesville, Florida. These five communities contained 1,656 beds in 446 units. We assumed approximately $35.4 million of fixed-rate mortgage debt in connection with this acquisition.
Owned Development Activities
With the commencement of the 2004/2005 academic year in late August and early September, we completed the development of three owned off-campus student housing properties at Temple University, Cal State Fresno and Cal State San Bernardino. These properties were placed into service with an opening occupancy of 98%. Collectively they contained 1,635 beds in 457 units. On January 5, 2005, we sold the Cal State San Bernardino community to the University upon exercise of its purchase option for $28.3 million and recognized a gain on sale of $5.9 million.
We are currently in the process of constructing one owned off-campus property and are in pre-development of two additional off-campus owned properties. We are also currently constructing one owned on-campus participating property. We anticipate that the total development cost relating to these activities will be approximately $150.3 million. As of March 31, 2005, we have incurred pre-development and development costs of approximately $26.1 million in connection with these properties, with the remaining development costs estimated at $124.2 million. The activities are described below:
We acquired a land parcel near the State University of New York—Buffalo and commenced development of an owned off-campus property containing 828 beds in 269 units. Total development cost is estimated to be $36.1 million. This property is currently in the final stages of construction and is pre-leased to 100% occupancy for its upcoming opening in August 2005. As of March 31, 2005, the project was approximately 68% complete, and we anticipate incurring remaining development costs of approximately $14.8 million.
We are in the later stages of design and pre-development on two owned off-campus properties with total anticipated development costs of approximately $97.2 million. One project is located in Newark, New Jersey near the campuses of the New Jersey Institute of Technology, Rutgers University and Essex County Community College. We anticipate development costs of this property to total approximately $62.3 million and plan to own this property through a joint venture that we will control with Titan Investments, a partner with whom we have previously developed four off-campus student housing properties. As of

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March 31, 2005, we have incurred approximately $0.5 million of pre-development costs related to this project. The second property is located in close proximity to Texas A&M University in College Station, Texas, and we estimate the total development costs of this property to be approximately $34.9 million. Both developments are currently progressing through their respective entitlement and municipal approval processes and are contingent upon receiving all necessary approvals. Depending upon the timeliness of these approvals, we plan to commence construction in Summer of 2005 for an August 2006 completion or to commence construction in Summer of 2006 for an August 2007 completion.
Our Cullen Oaks Phase II on-campus participating property, located on the campus of the University of Houston, is currently under construction with total development costs estimated to be $17.0 million. The project is scheduled to be completed in August 2005 in connection with the 2005/2006 academic year. As of March 31, 2005, the project was approximately 23% complete, and we anticipate incurring remaining development costs of approximately $12.7 million.
Amended Revolving Credit Facility
On June 17, 2005, we amended our three-year, $75 million revolving credit facility to increase the size of the facility to $100 million. KeyBank National Association (an affiliate of KeyBanc Capital Markets, a division of McDonald Investments Inc., which is an underwriter in this Offering) is the administrative agent under the amended facility. Citicorp North America, Inc. (an affiliate of Citigroup Global Markets Inc., which is a lead managing underwriter in this Offering) and Deutsche Bank Trust Company Americas (an affiliate of Deutsche Bank Securities Inc., which is a lead managing underwriter in this Offering) are co-syndication agents under the amended facility. JPMorgan Chase Bank, N.A. (an affiliate of J.P. Morgan Securities Inc., which is an underwriter in this Offering) is the documentation agent under the amended facility. The amended facility may be expanded by up to an additional $100 million upon the satisfaction of certain conditions. The amended facility is available to, among other things, fund future property development, acquisitions and other working capital needs. Our ability to borrow from time to time under the amended facility is subject to certain conditions and the satisfaction of specified financial covenants, which are more favorable to us than those contained in the facility prior to amendment. The amended facility also contains covenants that restrict our ability to pay dividends or other distributions to our stockholders unless certain tests are satisfied.
Senior Management Restructuring
On April 28, 2005 we announced the following restructuring of our senior management:
  James C. Hopke, Jr. rejoined our Company and was appointed as Executive Vice President and Chief Investment Officer;
 
  Brian B. Nickel, our former Executive Vice President, Chief Investment Officer and Secretary, was appointed as Executive Vice President, Chief Financial Officer and Secretary;
 
  Jonathan Graf, our former Vice President and Controller, was promoted to Senior Vice President, Chief Accounting Officer and Treasurer;
 
  Greg A. Dowell, our former Senior Vice President and Chief of Operations, was promoted to Executive Vice President and Chief of Operations; and
 
  Kim K. Voss, our former Assistant Controller, was promoted to Vice President and Controller.
In April 2005, Ronnie Macejewski resigned as Senior Vice President—Development and Construction and in May 2005, Mark J. Hager resigned as Executive Vice President, Chief Financial and Accounting Officer and Treasurer.

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Competitive Strengths
We believe that we have the following competitive advantages:
  Student housing is our core business. We have expertise in the unique and specialized aspects of the student housing industry and focus on student housing as our core business. We are a fully integrated organization, which is capable of conducting market analysis, administering the entitlement and municipal approval process, coordinating product design, securing financing, administering the development process and providing construction management, leasing and property management services. Since our inception in 1993, we have been one of the most active companies in the sector as we have been involved in the development, acquisition, ownership and/or management of more than 62 student housing properties containing more than 38,200 beds.
 
  •  One of the industry’s most experienced teams. Collectively throughout their individual careers, the seven members of our senior management team have been involved in the development, acquisition or management of more than 114 student housing properties containing more than 73,500 beds at 78 colleges and universities. Our corporate team of student housing professionals have participated in every functional aspect of the ownership, acquisition, development and management of student housing. Six corporate employees at the level of Vice President or above, including our CEO, began their careers in student housing as resident assistants while in college, providing us with a comprehensive understanding of the operational aspects of the student housing business. We believe that this history of experience provides a base of knowledge that has facilitated building a company with substantial operating and development expertise in the student housing industry.
 
  High quality student housing properties. As of March 31, 2005, our properties had an average age of only 4.7 years. Our properties are located in close proximity to, and in the case of our on-campus participating properties on the grounds of, major colleges and universities. Our typical units include private bedrooms, private or semi-private bathrooms, living rooms and full kitchens with modern appliances. Our properties typically offer extensive amenities and services, including swimming pools, basketball, sand volleyball and/or tennis courts and clubhouses with fitness centers, recreational rooms and computer labs, in an academically oriented environment that parents appreciate. Each of our properties is managed and cared for by our trained on-site staff— managers, maintenance, business personnel and resident assistants.
 
  Extensive network of university and college relationships. This network provides us with acquisition, development and management opportunities. Our clients have included some the nation’s most prominent systems of higher education, including the State University of New York System, the University of California System, the Texas A&M University System, the Texas State University System, the University of Georgia System, the University of North Carolina System, the Purdue University System, the University of Colorado System and the Arizona State University System.
 
  Industry innovators. With nearly $1 billion of development completed or in progress and in excess of $300 million of properties acquired over the last decade, we have led the industry in evolving student housing in the areas of product design concepts, site planning, unit plans and amenity offerings. We have also developed and implemented specialized student housing investment and operating systems and have created a proprietary lease administration and marketing software customized for student housing that enables us to quickly identify and respond to market changes and trends.
Summary Risk Factors
You should carefully consider the following important risks:
  Our results of operations are subject to an annual leasing cycle, short lease-up period, seasonal cash flows, changing university admission and housing policies and other risks inherent in the

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  student housing industry. We generally lease our owned properties under 12-month leases, and in certain cases, under ten-month, nine-month or shorter-term semester leases. As a result, we may experience significantly reduced cash flows during the summer months at properties leased under leases having terms shorter than 12 months. Furthermore, all of our properties must be entirely re-leased each year, exposing us to increased leasing risk. Student housing properties are also typically leased during a limited leasing season that usually 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 season.
 
  We face significant competition from university-owned on-campus student housing, from other off-campus student housing properties and from traditional multifamily housing located within close proximity to universities. On-campus student housing has certain inherent advantages over off-campus student housing in terms of physical proximity to the university campus and integration of on-campus facilities into the academic community. Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us and other private sector operators. We also compete with national and regional owner-operators of off-campus student housing in a number of markets as well as with smaller local owner-operators.
 
  •  As of March 31, 2005, our total consolidated indebtedness was approximately $309.4 million (excluding unamortized debt premiums). Our debt service obligations expose us to the risk of default and reduce (or eliminate) cash resources that are available to operate our business or pay distributions, including those necessary to maintain our REIT qualification. There is no limit on the amount of indebtedness that we may incur except as provided by the covenants in our revolving credit facility. We expect to incur additional indebtedness under our revolving credit facility to fund future property development and acquisitions and other working capital needs, subject to certain conditions and the satisfaction of specified financial covenants. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences.
 
  •  Our future growth will be dependent upon our ability to successfully develop, acquire and manage new properties. As we develop and acquire additional properties, we will be subject to risks associated with managing new properties, including lease-up and integration risks. Newly developed and recently acquired properties may not perform as expected and newly acquired properties may have characteristics or deficiencies unknown to us at the time of acquisition. There can be no assurance that future acquisition and development opportunities will be available to us on terms that meet our investment criteria or that we will be successful in capitalizing on such opportunities. Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms, or at all.
 
  •  We have been recently organized and have a limited operating history. In addition, all of our properties have been acquired or developed by us or our predecessors within the past nine years and have limited operating histories under current management. Our management has limited experience in running a public company or in operating in accordance with the requirements for qualification as a REIT.
 
  Provisions of our charter limit the ownership of our shares. Our charter provides that, subject to certain exceptions, no person or entity may beneficially own, or be deemed to own by virtue of certain constructive ownership provisions, more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of our common stock or more than 9.8% by value of all our outstanding shares, including both common and preferred stock. We refer to this restriction as our “ownership limit.” Our charter, however, requires 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. This ownership limit could delay, defer or prevent a change of control or other transaction that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

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  In order to qualify as a REIT, we are required under the Internal Revenue Code of 1986, as amended, or the “Code,” to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. Our TRS, or “taxable REIT subsidiary,” may, in its discretion, retain any income it generates net of any tax liability it incurs on that income without affecting the 90% distribution requirements to which we are subject as a REIT. Net income of our TRS will be included in REIT taxable income, and will increase the amount required to be distributed, only if such amounts are paid out as a dividend by our TRS. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flow. Consequently, we will be compelled to rely on third party sources to fund our capital needs. We may not be able to obtain this financing on favorable terms or at all. Any additional indebtedness that we incur will increase our leverage. 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 as a REIT.
 
  To qualify as a REIT, we are required to comply with highly technical and complex provisions of the Code. Failure to qualify as a REIT would likely subject us to higher tax expenses and reduce or eliminate cash available for distribution to our stockholders.
 
  The operations of our on-campus participating properties and our third party services are conducted through our TRS. The income from these operations is 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.
 
  We may not be able to make distributions to our stockholders in the future, and we may make distributions that include a return of capital.
Our Business and Growth Strategies
Our primary business objectives are to maximize long-term stockholder value and cash flow available for distribution to our stockholders. We intend to achieve these objectives by:
  developing and acquiring owned off-campus student housing communities that meet our focused investment criteria;
 
  maximizing the profitability of our owned and third-party managed properties through proactive marketing, management and asset preservation strategies; and
 
  continuing to grow our third-party development and management services businesses to generate cash flow and build our national reputation among colleges and universities.
The following summarizes the key aspects of our strategies:
Follow a Disciplined Off-Campus Acquisition and Development Strategy
Our investment criteria are focused on acquiring and developing high quality, modern student housing properties that are located in close proximity to major colleges and universities. We target properties that offer pedestrian, bicycle or university bus service access to their respective campuses. We acquire and develop properties that feature a differentiated product offering and are located in student housing submarkets with barriers to entry. Our focused investment criteria coupled with our superior operational capabilities provide an opportunity to increase the value and cash flow of our properties. We believe that our reputation and close relationship with colleges and universities also gives us an advantage in sourcing acquisition and development opportunities, obtaining municipal approvals and community support for our development projects, and in creating marketing or operational advantages.

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We consider many factors when determining whether we should enter a market and, if so, whether through acquisition or development and how to position our property within the market, including the following:
Property Factors
  Proximity to campus
 
  Unit mix compared to competition
 
  Marketability of floor plans compared to competition
 
  Quality and marketability of amenity offering compared to competition
 
  Total housing cost to residents compared to each direct competitor
 
  Age of the structure
 
  Quality of construction and impact related to ongoing capital expenditures
 
  Quality of furniture, fixtures and equipment and impact on ongoing capital expenditures
 
  Condition and extraordinary cost impacts related to mechanical and physical plant systems
 
  Operational and marketing inefficiencies and identification of areas for improvement
 
  Internet, communications and entertainment features incorporated into the structure
 
  Reputation of the property and competitor properties among students and key university offices
University Factors
  Size of college or university
 
  Enrollment characteristics and growth projections
 
  Percent of students housed on-campus
 
  On-campus housing requirements and policies
 
  On-campus housing products and pricing
 
  Development plans for future housing
 
  University’s admission policy and expected changes to such policies
 
  Presence of university services/programs that enable establishing formal relationships
Market Factors
  Fundamentals of the overall local housing market
 
  Fundamentals of student housing submarkets
 
  Nature of direct competitors and their product offering
 
  Impact of greater housing market on each student housing submarket
 
  Barriers to entry in each student housing submarket
 
  Student preferences related to each student housing submarket
 
  Planned or potential future student housing development
After we identify a potential student housing acquisition or development opportunity, a team consisting of in-house personnel and third parties will conduct detailed due diligence to assess the potential opportunity.
Given our significant development and acquisition activities over the last decade, we have developed active relationships with universities, developers, owners, lenders and brokers of student housing properties that allow us to identify and capitalize on acquisition and development opportunities. As a result, we have

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generated a proprietary database of contacts and properties that assist us in identifying and evaluating acquisition and development opportunities. Through our experienced development staff and our relationship with certain developers with whom we have previously developed off-campus student housing properties, we will continue to identify and acquire development sites in close proximity to colleges and universities that permit us to develop unique properties that offer a competitive advantage. We will also continue to benefit from opportunities derived from our extensive network with colleges and universities.
Maximize Property-Level Profitability
We seek to maximize property-level profitability by maximizing occupancy and revenue along with the implementation of prudent cost control systems. Our experienced and trained on-site management personnel administer the timely execution of our marketing, management and maintenance plans with corporate support and supervision in all functional areas.
Some of our specific expense control initiatives include:
  establishing internal controls and procedures for cost control consistently throughout our communities;
 
  appropriately staffing our properties at the site-level, minimizing multiple layers of management and increasing effectiveness;
 
  negotiating utility and service-level pricing arrangements with national and regional vendors and requiring corporate-level approval of service agreements for each community; and
 
  conducting analysis of the costs and effectiveness of each of our marketing programs via our proprietary LAMS system.
Utilize our Proprietary Marketing Systems
We believe we have developed the industry’s only specialized, fully integrated leasing administration and marketing software program, which we call LAMS. We utilize LAMS to maximize our revenue and improve the efficiency and effectiveness of our marketing and lease administration process. Through LAMS, each of our properties’ ongoing marketing and leasing efforts are supervised at the corporate office on a real time basis. Among other things, LAMS provides:
  •  a fully integrated prospect tracking and follow-up system. Prospect information from all types of inquiries—walk-in, telephone, web site/email, or fax—is recorded and entered into the LAMS database, and an aggressive, fully-automated follow-up and tracking program is then implemented, with LAMS generating follow-up labels and electronic communications and disseminating marketing messages.
 
  a built-in marketing effectiveness program to measure the success of our marketing efforts on a real time basis. LAMS generates a weekly traffic analysis that shows the quantity of each type of inquiry received for that period as well as the marketing medium that generated each piece of traffic. In addition, LAMS generates a period-to-period comparative traffic and leasing analysis that allows us to compare the pace of the current year’s traffic and leasing activity to that of previous years. This enables us to track the effectiveness of each marketing program being utilized and to respond accordingly.
 
  a real-time monitor of lease closings and leasing terms. LAMS automatically generates closing reports allowing us to measure the staff’s closing ratios. The closing ratios are calculated by LAMS on an individual basis so that we may better evaluate performance and optimize our staffing. LAMS generates application and leasing status reports that detail the current period and year-to-date status of applications and leasing broken down by type of accommodation. This enables us to quickly identify potential problems related to pricing and/or desirability of our various types of accommodations and to respond accordingly.

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  an automated lease generation system. Each property’s lease term and rental rate information is set up in LAMS by authorized corporate staff. This enables the corporate office to maintain tight controls on pricing changes and special promotions. LAMS generates each resident lease, eliminating the potential for manual errors of our on-site staff.
Our Properties
Our properties generally are modern facilities, and amenities at most of our properties include a swimming pool, basketball courts and a large community center featuring a fitness center, computer center, tanning beds, study areas, and a recreation room with billiards and other games. Some properties also have a jacuzzi/hot tub, volleyball courts, tennis courts and in-unit washers and dryers. Lease terms are generally 12 months at our off-campus properties and 9 months at our on-campus participating properties. As of March 31, 2005, the average age of our properties was 4.7 years.
The following table presents certain information about our owned property portfolio as of March 31, 2005.
                                             
    Year       Primary   Occupancy        
    Acquired/       University   Rates        
Property   Developed   Location   Served   (1)   Units   Beds
                         
Off-campus properties:
                                           
1.  Commons On Apache
  1999     Tempe, AZ     Arizona State University Main Campus     100.0 %     111       444  
2.  The Village at Blacksburg
  2000     Blacksburg, VA     Virginia Polytechnic Institute and State University     98.6 %     288       1,056  
3.  The Village on University
  1999     Tempe, AZ     Arizona State University Main Campus     99.1 %     288       918  
4.  River Club Apartments
  1999     Athens, GA     The University of Georgia— Athens     95.5 %     266       794  
5.  River Walk Townhomes
  1999     Athens, GA     The University of Georgia— Athens     97.1 %     100       340  
6.  The Callaway House(2)
  2001     College Station, TX     Texas A&M University     101.3 %     173       538  
7.  The Village at Alafaya Club
  2000     Orlando, FL     The University of Central Florida     97.4 %     228       840  
8.  The Village at Science Drive
  2001     Orlando, FL     The University of Central Florida     99.3 %     192       732  
9.  University Village at Boulder Creek
  2002     Boulder, CO     The University of Colorado at Boulder     87.7 %     82       309  
10. University Village at Fresno
  2004     Fresno, CA     California State University, Fresno     98.8 %     105       406  
11. University Village at TU
  2004     Philadelphia, PA       Temple University       98.8 %     220       749  
12. University Village at Sweet Home(3)
  2005     Amherst, NY     State University of New York— Buffalo     —        269       828  
13. University Club Tallahassee
  2005     Tallahassee, FL     Florida State University     93.4 %     152       608  
14. The Grove at University Club
  2005     Tallahassee, FL     Florida State University     98.4 %     64       128  
15. College Club Tallahassee
  2005     Tallahassee, FL     Florida A&M University     92.4 %     96       384  

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    Year       Primary   Occupancy        
    Acquired/       University   Rates        
Property   Developed   Location   Served   (1)   Units   Beds
                         
16. The Greens at College Club
  2005     Tallahassee, FL     Florida A&M University     96.9 %     40       160  
17. University Club Gainesville
  2005     Gainesville, FL     University of Florida     98.9 %     94       376  
18. City Parc at Fry Street
  2005     Denton, TX     University of North Texas     94.7 %     136       418  
19. Exchange at Gainesville (to be renamed)
  2005     Gainesville, FL     University of Florida     95.6 %     396       1,044  
                                   
Total off-campus properties
                        97.2 %     3,300       11,072  
On-campus participating properties:
                                           
20. University Village—PVAMU
  1996/ 97/98     Prairie View, TX     Prairie View A&M University     93.0 %     612       1,920  
21. University College—PVAMU
  2000/ 2003     Prairie View, TX     Prairie View A&M University     95.0 %     756       1,470  
22. University Village—TAMIU
  1997     Laredo, TX     Texas A&M International University     70.2 %     84       252  
23. Cullen Oaks Phase I
  2001     Houston, TX     The University of Houston     99.6 %     231       525  
24. Cullen Oaks Phase II(3)
  2005     Houston, TX     The University of Houston     —        180       354  
                                   
Total on-campus participating properties
                        93.1 %     1,863       4,521  
                                   
Total—all properties
                        96.0 %     5,163       15,593  
                                   
 
(1)  Occupancy rates are calculated as of March 31, 2005. Occupancy is based on the number of total occupied beds (including beds occupied by staff) divided by total beds.
 
(2)  Also has a food service facility.
 
(3)  Currently under development with a scheduled completion date of August 2005.

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The following table sets forth certain comparative information as of May 27, 2005 and May 28, 2004 (the last Friday in May for each period reported) regarding the leasing status of our owned off-campus properties for the 2005/2006 and 2004/2005 academic years, respectively.
                                                           
    Applications   % of   Applications            
    and Leases   Rentable   and Leases   Variance to        
    as of   Beds as of   as of   Prior Year       Total
    May 27,   May 27,   May 28,       Rentable   Design
Applications and Leases   2005   2005   2004   Beds   %   Beds(1)   Beds
                             
Commons of Apache
    444       100.0%       444       0       0.0 %     444       444  
The Village at Blacksburg
    1,034       98.7%       1,030       4       0.4 %     1,048       1,056  
The Village on University
    515       56.7%       656       (141 )     (21.5 )%     909       918  
River Club Apartments
    719       92.8%       543       176       32.4 %     775       794  
River Walk Townhomes
    296       88.9%       316       (20 )     (6.3 )%     333       340  
The Callaway House
    642       121.8%       569       73       12.8 %     527       538  
The Village at Alafaya Club
    581       70.1%       586       (5 )     (0.9 )%     829       840  
The Village at Science Drive
    717       99.3%       718       (1 )     (0.1 )%     722       732  
University Village at Boulder Creek
    168       56.2%       218       (50 )     (22.9 )%     299       309  
University Village Fresno
    336       84.8%       218       118       54.1 %     396       406  
University Village at TU
    728       99.3%       734       (6 )     (0.8 )%     733       749  
University Village at Sweet Home
    835       102.2%       n/a       n/a       n/a       817       828  
University Club Tallahassee(2)
    744       102.5%       n/a       n/a       n/a       726       736  
College Club Tallahassee(3)
    392       73.1%       n/a       n/a       n/a       536       544  
University Club Gainesville
    267       71.8%       n/a       n/a       n/a       372       376  
City Parc at Fry Street
    196       47.6%       n/a       n/a       n/a       412       418  
Exchange at Gainesville (to be renamed)
    949       92.0%       n/a       n/a       n/a       1,032       1,044  
                                           
 
Total
                                            10,910       11,072  
                                           
 
(1)  Rentable Beds exclude beds needed for on-site staff and/or model units.
 
(2)  For lease administration purposes, University Club Tallahassee and the Grove at University Club are reported combined.
 
(3)  For lease administration purposes, College Club Tallahassee and the Greens at College Club are reported combined.
Third Party Services
We are one of the nation’s leaders in the third party development and management of on-campus housing, which has allowed us to develop key relationships with colleges and universities. These relationships, and the corresponding national reputation that we have developed in this portion of our business, benefits us when developing and managing our owned off-campus properties. The revenues we earn from our third party services comprised approximately 13% of our 2004 revenues as compared to approximately 16% of our 2003 revenues. We believe that these services continue to provide synergies with respect to our ability to identify, acquire or develop, and successfully operate, student housing properties. These services are conducted through our TRS and are described below.
Development Services. We provide development and construction management services to third parties that range from short-term consulting projects to longer-term full-scale development and construction management projects. We typically provide these services to colleges and universities seeking to modernize their on-campus student housing properties. They look to us to bring our student housing experience and expertise to ensure they develop marketable, functional and financially sustainable facilities. Educational institutions usually seek to build housing that will enhance their recruitment and retention of students while facilitating an academically-oriented environment. Most of these development service contracts are awarded via a competitive request for proposal, or RFP process, that qualifies developers based on their

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overall ability to provide specialized student housing design, development, construction management, financial structuring and property management services. As of March 31, 2005, we had five third party projects in pre-development or under construction with a total contractual fee amount of approximately $5.9 million, of which approximately $5.1 million is to be earned and recognized in the remainder of 2005 and 2006.
Property Management Services. We enter into third party management contracts pursuant to which we are typically responsible for all aspects of a property’s operations, including marketing, leasing administration, facilities maintenance, business administration, accounts payable, accounts receivable, financial reporting, capital projects and residence life student development. As of March 31, 2005, we provided third party management services for 19 student housing properties that represented approximately 11,300 beds in approximately 4,500 units. We developed 13 of these properties. We provide these services pursuant to multi-year management agreements that generally range between two and five years.

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Our Organization
The following diagram depicts our ownership structure and the ownership structure of our Operating Partnership and TRS as of the date of this prospectus:
LOGO
 
(1)  Includes a 0.1% interest held by American Campus Communities Holdings LLC, which is the general partner of our Operating Partnership.
 
(2)  Profits interest units, or PIUs, represent limited partnership interests in the Operating Partnership, which, upon consummation of the Offering, will become ordinary units exchangeable for cash or, at the option of the Operating Partnership, for shares of our common stock on a one-for-one basis.
Distribution Policy
We are required to distribute 90% of our REIT taxable income, excluding capital gains, on an annual basis to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to common stockholders and PIU holders. All such distributions are at the discretion of our board of directors. We may be required to use borrowings under our credit facility, if necessary and to the extent permitted thereunder, to meet REIT distribution requirements and qualify as a REIT and otherwise fund the remaining amounts of any distributions. The

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board of directors considers market factors and our performance in addition to REIT requirements in determining distribution levels.
On May 11, 2005, we declared a distribution per share of common stock of $0.3375, which was paid on May 31, 2005 to all common stockholders of record as of May 19, 2005. At the same time, we paid an equivalent amount per unit to holders of PIUs and restricted stock awards. These distributions equate to an annualized amount of $1.35 per share and represent a 6.1% yield based on the June 17, 2005 closing price of $21.97 per share.
Our Tax Status
We intend to elect to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ended December 31, 2004. We believe that our organization and method of operation will enable us to meet the requirements for qualification and taxation as a REIT for federal income tax purposes. To maintain REIT status, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute at least 90% of our REIT taxable income to our stockholders. As a REIT, we generally are not subject to federal income tax on REIT taxable income we currently distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax at regular corporate rates. Even if we qualify for taxation as a REIT, we may be subject to some federal, state and local taxes on our income or property and the income of our TRS will be subject to taxation at normal corporate rates and state and local income tax where applicable. Further, unlike dividends received from a corporation that is not a REIT, our distributions to individual stockholders generally will not be eligible for the recent lower tax rate on dividends except in limited situations.
Summary Historical and Pro Forma Selected Financial Data
The following tables set forth our summary historical selected financial and operating data on a consolidated historical basis for us and on a combined historical basis for our Predecessor Entities. Results for the year ended December 31, 2004 represent the combined historical data for our Predecessor Entities for the period from January 1, 2004 to August 16, 2004 as well as our consolidated results for the period from August 17, 2004 to December 31, 2004. Our consolidated results reflect our post-IPO structure as a REIT, including the operations of the TRS, which was not present in the operations of our Predecessor Entities. The combined historical financial information for our Predecessor Entities includes:
  the development and management service operations and real estate operations of American Campus Communities, L.L.C. (one of the Predecessor Entities);
 
  the real estate operations of RAP Student Housing Properties, L.L.C. (“RAP SHP”) and its subsidiaries (including The Village at Riverside, which we ceased owning after the completion of the IPO, and Coyote Village, which was transferred to Weatherford College in April 2004); and
 
  the joint venture properties and operations of American Campus–Titan, LLC and American Campus–Titan II, LLC.
You should read the following summary financial data in conjunction with the consolidated and combined historical financial statements and the related notes and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this prospectus.
Our unaudited historical consolidated balance sheet information as of March 31, 2005 and consolidated and combined statements of operations for the three months ended March 31, 2005 and 2004 are derived from our unaudited historical combined financial statements, which we believe include all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. Our results of operations for the interim period ended March 31, 2005 are not necessarily indicative of the results to be obtained for the full fiscal year.

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The unaudited pro forma condensed consolidated and combined statements of operations for the three months ended March 31, 2005 and for the year ended December 31, 2004 are presented as if we had acquired Exchange at Gainesville (acquired March 2005), City Parc at Fry Street (acquired March 2005) and the five-property Proctor Portfolio (acquired February 2005) as of January 1, 2004. It was also assumed that our IPO transactions all had occurred as of January 1, 2004. The pro forma adjustments include the related repayment of certain debt and the acquisition of minority ownership of certain assets. All such transactions are reflected on our March 31, 2005 consolidated balance sheet, which is included elsewhere in this prospectus.
The following summary unaudited financial data should be read together with the pro forma condensed consolidated and combined statements of operations and our historical financial statements and related notes included elsewhere in this prospectus. The pro forma condensed consolidated and combined statements of operations are unaudited and are not necessarily indicative of what the actual results of operations would have been had we acquired the properties or consummated the IPO as of January 1, 2004, nor do they purport to represent the results of our operations for future periods. While such unaudited pro forma condensed consolidated and combined financial statements are based on adjustments that we deem appropriate and that were factually supported based on currently available data, the pro forma information may not be indicative of what actual results would have been, nor does this information present our financial results or condition for future periods.
Statements of Operations Information:
(in thousands, except for share and per share data)
                                                           
    Three Months Ended March 31,   Years Ended December 31,
         
    Historical       Historical    
        Pro Forma       Pro Forma
    2005   2004   2005   2004   2003   2002   2004
                             
                    (Unaudited)
    (Unaudited)                
Revenues
  $ 19,541     $ 15,352     $ 22,325     $ 60,823     $ 57,136     $ 52,131     $ 76,623  
Income (loss) from continuing operations
    2,311       1,585       2,646       (1,572 )     (967 )     (2,753 )     (1,785 )
Discontinued operations:
                                                       
 
(Loss) income attributable to discontinued operations
    (2 )     (55 )             272       7       319          
 
Gain (loss) from disposition of real estate
    5,883       —                (39 )     16       295          
Net income (loss)
    8,192       1,530               (1,339 )     (944 )     (2,139 )        
Per share and distribution data:(1)
Income per diluted share:
                                                       
 
Income from continuing operations
  $ 0.19             $ 0.21     $ 0.10                     $ (.14 )
 
Discontinued operations
    0.46                       0.05                          
                                           
 
Net income
  $ 0.65                     $ 0.15                          
Cash distributions declared per share/unit
    0.3375                       0.1651                          
Cash distributions declared
    4,277                       2,104                          

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Balance Sheet Data:
(in thousands)
                                   
    As of   As of December 31,
    March 31,    
    2005   2004   2003   2002
                 
    (Unaudited)            
Total assets
  $ 486,487     $ 367,628     $ 330,566     $ 307,658  
Debt
    314,385       201,014       267,518       249,706  
Stockholders’ and Predecessor Entities owners’ equity(2)
    141,380       138,229       27,658       35,526  
 
Selected Owned Property Information:
                               
 
Owned properties
    24       18       14       14  
 
Units
    5,163       4,317       3,567       3,459  
 
Beds
    15,593       12,955       10,546       10,336  
 
Occupancy
    96.0 %     97.1 %     91.5 %     91.0 %
Cash flow information:
(in thousands)
                                           
    Three Months Ended    
    March 31,   Years Ended December 31,
         
    2005   2004   2004   2003   2002
                     
    (Unaudited)            
 
Net cash provided by operating activities
  $ 5,713     $ 5,237     $ 17,293     $ 6,862     $ 7,647  
 
Net cash used in investing activities
    (58,853 )     (19,213 )     (63,621 )     (33,738 )     (21,678 )
 
Net cash provided by financing activities
    55,515       13,004       45,151       21,537       11,646  
 
Funds from operations (“FFO”):
                                       
 
Net income (loss)
  $ 8,192     $ 1,530     $ (1,339 )   $ (944 )   $ (2,139 )
 
Minority interests
    87       (21 )     (100 )     (16 )     (30 )
 
(Gain) loss from disposition of real estate
    (5,883 )     —        39       (16 )     (295 )
 
Real estate related depreciation and amortization
    3,326       2,277       10,009       8,937       8,233  
                               
 
Funds from operations(3)(4)
  $ 5,722     $ 3,786     $ 8,609     $ 7,961     $ 5,769  
                               
 
(1)  Represents per share information and cash distributions declared during the period from August 17, 2004 through March 31, 2005.
 
(2)  Information as of March 31, 2005 and December 31, 2004 reflects our stockholders’ equity as a result of the IPO while previous years reflect the equity of the owners of our Predecessor Entities.
 
(3)  As defined by the National Association of Real Estate Investment Trusts or NAREIT, funds from operations or FFO represents income (loss) before allocation to minority interest (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.
  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an

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  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.
(4)  When considering our FFO, we believe it is also a meaningful measure of our performance to exclude certain revenues and expenses from our on-campus participating properties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Funds from Operations.”
This Offering
Common stock offered by us 3,400,000 shares(1)
 
Common stock to be outstanding after this Offering 16,015,000 shares(1)
 
Common stock and Operating Partnership units to be outstanding after this Offering 16,136,000 shares/units(1)(2)
 
Use of proceeds We intend to use the net proceeds from this Offering to fund the acquisition and development of student housing properties. In the interim, we intend to use $50.2 million to repay the outstanding balance of our revolving credit facility and the remaining $19.0 million for working capital and general corporate purposes.
 
New York Stock Exchange symbol “ACC”
 
(1)  Excludes 510,000 shares issuable upon exercise of the underwriters’ overallotment option, 653,345 shares available for future issuance under our 2004 incentive award plan and the following shares issued under our 2004 incentive award plan:
  •  14,375 shares underlying restricted stock units granted to non-employee directors;
 
  •  53,598 restricted stock awards granted to employees;
 
  •  367,682 shares underlying an outperformance bonus plan for key employees; and
 
  •  121,000 PIUs described in Note 2 below.
(2)  Includes 121,000 PIUs issued by us to certain of our current and former key employees. Upon the consummation of this Offering, all of the PIUs will become ordinary units exchangeable for cash or, at the option of the Operating Partnership, for shares of our common stock on a one-for-one basis.

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RISK FACTORS
Investment in our common stock involves a high degree of risk. You should therefore carefully consider the material risks of an investment in our common stock, which are discussed in this section, as well as the other information contained in this prospectus, before making your 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 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 “Forward Looking Statements.”
Risks Related to Our Properties and Our Business
Our results of operations are subject to an annual leasing cycle, short lease-up period, seasonal cash flows, changing university admission and housing policies and other risks inherent in the student housing industry.
We generally lease our owned properties under 12-month leases, and in certain cases, under ten-month, nine-month or shorter-term semester leases. As a result, we may experience significantly reduced cash flows during the summer months at properties leased under leases having terms shorter than 12 months. Furthermore, all of our properties must be entirely re-leased each year, exposing us to increased leasing risk. In addition, we are subject to increased leasing risk on our properties under construction and future acquired properties based on our lack of experience leasing those properties and unfamiliarity with their leasing cycles. Student housing properties are also typically leased during a limited leasing season that usually 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 season.
Changes in university admission policies could adversely affect us. For example, if a university reduces the number of student admissions or requires that a certain class of students, such as freshman, live in a university owned facility, 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 such change in admission policy, 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.
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 colleges and universities own and operate their own competing on-campus facilities, as discussed below. Any failure to maintain good relationships with these colleges and universities could therefore have a material adverse effect on us. If colleges and universities refuse to make their lists of prospective student-tenants and their parents available to us or increase the costs of these lists, there could be a material adverse effect on us.
Federal and state laws require colleges to publish and distribute reports of on-campus crime statistics, which may result in negative publicity and media coverage associated with crimes occurring on or in the vicinity of our on-campus participating 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 business.
We face significant competition from university-owned on-campus student housing, from other off-campus student housing properties and from traditional multifamily housing located within close proximity to universities.
On-campus student housing has certain inherent advantages over off-campus student housing in terms of physical proximity to the university campus and integration of on-campus facilities into the academic community. Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us and other private sector operators. We also compete with national and regional

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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 significant market share. There are a number of student housing complexes that are located near or in the same general vicinity of many of our owned properties and that compete directly with us. Such competing student housing complexes may be newer than our properties, located closer to campus, charge less rent, possess more attractive amenities or offer more services or shorter term or more flexible leases.
Rental income at a particular property could also be affected by a number of other factors, including the construction of new on-campus and off-campus residences, increases or decreases in the general levels of rents for housing in competing communities, increases or decreases in the number of students enrolled at one or more of the colleges or universities in the market of the property and other general economic conditions.
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 entry of one or more of these companies could increase competition for students and for the acquisition, development and management of other student housing properties.
We may be unable to successfully complete and operate our properties or our third party developed properties.
We intend to continue to develop and construct student housing in accordance with our growth strategies, including our one off-campus property and one on-campus participating property currently under development, as well as the two off-campus properties currently in pre-development. These activities may also include any of the following risks:
  We may be unable to obtain construction financing on favorable terms or at all.
 
  We may be unable to obtain permanent financing on favorable terms or at all if we finance development projects through construction loans.
 
  We may not complete development projects on schedule, within budgeted amounts or in conformity with building plans and specifications, including our four current properties under development.
 
  We may encounter delays or refusals in obtaining all necessary zoning, land use, building, occupancy and other required governmental permits and authorizations.
 
  Occupancy and rental rates at newly developed or renovated properties may fluctuate depending on a number of factors, including market and economic conditions, and may reduce or eliminate our return on investment.
 
  We may become liable for injuries and accidents occurring during the construction process and for environmental liabilities, including off-site disposal of construction materials.
 
  We may decide to abandon our development efforts if we determine that continuing the project would not be in our best interests.
 
  We may encounter strikes, weather, government regulations and other conditions beyond our control.
Our newly developed properties will be subject to risks associated with managing new properties, including lease-up and integration risks. In addition, new development activities, regardless of whether or not they are ultimately successful, typically will require a substantial portion of the time and attention of our development and management personnel. Newly developed properties may not perform as expected.
We anticipate that we will, from time to time, elect not to proceed with ongoing development projects. If we elect not to proceed with a development project, the development costs associated therewith will

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ordinarily be charged against income for the then-current period. Any such charge could have a material adverse effect on our results of operations in the period in which the charge is taken.
We may in the future develop properties nationally, internationally or in geographic regions other than those in which we currently operate. We do not possess the same level of familiarity with development in these new markets, which could adversely affect our ability to develop such properties successfully or at all or to achieve expected performance. Future development opportunities may not be available to us on terms that meet our investment criteria or we may be unsuccessful in capitalizing on such opportunities. Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms or at all.
We typically provide guarantees of timely completion of projects that we develop for third parties. In certain cases, our contingent liability under these guarantees may exceed our development fee from the project. Although we seek to mitigate this risk by, among other things, obtaining similar guarantees from the project contractor, we could sustain significant losses if development of a project were to be delayed or stopped and we were unable to cover our guarantee exposure with the guarantee received from the project contractor.
We may be unable to successfully acquire properties on favorable terms.
Our future growth will be dependent upon our ability to successfully acquire new properties on favorable terms. As we acquire additional properties, we will be subject to risks associated with managing new properties, including lease-up and integration risks. Newly developed and recently acquired properties may not perform as expected and may have characteristics or deficiencies unknown to us at the time of acquisition. Future acquisition opportunities may not be available to us on terms that meet our investment criteria or we may be unsuccessful in capitalizing on such opportunities. Our ability to capitalize on such opportunities will be largely dependent upon external sources of capital that may not be available to us on favorable terms or at all.
Our ability to acquire properties on favorable terms and successfully operate them involve the following significant risks:
  Potential inability to acquire a desired property may be caused by competition from other real estate investors.
 
  Competition from other potential acquirers may significantly increase the purchase price.
 
  We may be unable to finance an acquisition on favorable terms or at all.
 
  We may have to incur significant capital expenditures to improve or renovate acquired properties.
 
  We may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.
 
  Market conditions may result in higher than expected costs and vacancy rates and lower than expected rental rates.
 
  We may acquire 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 and claims for indemnification by members, directors, officers and others indemnified by the former owners of our properties.
Our failure to finance property acquisitions on favorable terms, or operate acquired properties to meet our financial expectations, could adversely affect us.

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Our debt level reduces cash available for distribution and may expose us to the risk of default under our debt obligations.
As of March 31, 2005, our total consolidated indebtedness was approximately $309.4 million (excluding unamortized debt premiums). Our debt service obligations expose us to the risk of default and reduce or eliminate cash resources that are available to operate our business or pay distributions that are necessary to maintain our REIT qualification. There is no limit on the amount of indebtedness that we may incur except as provided by the covenants in our revolving credit facility. We expect to incur additional indebtedness under our revolving credit facility to fund future property development and acquisitions and other working capital needs, which may include the payment of distributions to our stockholders. The amount available to us and our ability to borrow from time to time under our revolving credit facility is subject to certain conditions and the satisfaction of specified financial covenants. Our level of debt and the limitations imposed on us by our debt agreements 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 our original indebtedness.
 
  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.
 
  Foreclosures could create taxable income without accompanying cash proceeds, a circumstance that could hinder our ability to meet the REIT distribution requirements imposed by the Code.
We may not be able to recover pre-development costs for university developments.
University systems and educational institutions typically award us development services contracts on the basis of a competitive award process, but such contracts are typically executed following the formal approval of the transaction by the institution’s governing body. In the intervening period, we may incur significant pre-development and other costs in the expectation that the development services contract will be executed. If an institution’s governing body does not ultimately approve our selection and the terms of the pending development contract, we may not be able to recoup these costs from the institution and the resulting losses could be material.
Our awarded projects may not be successfully structured or financed and may delay our recognition of revenues.
The recognition and timing of revenues from our awarded development services projects will, among other things, be contingent upon successfully structuring and closing project financing as well as the timing of construction. The development projects that we have been awarded have at times been delayed beyond the originally scheduled construction commencement date. If such delays were to occur with our current awarded projects, our recognition of expected revenues and receipt of expected fees from these projects would be delayed.
Two of our properties are under construction, and we may encounter delays in completion or experience cost overruns.
Two of our properties, which upon completion will comprise approximately 7.6% of our total beds, are currently under construction and are subject to the various risks relating to properties that are under construction referred to elsewhere in these risk factors, including the risks that we may encounter delays in completion and that these two projects may experience cost overruns. These properties may not be

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completed on time for the 2005/2006 academic year. Additionally, if we do not complete the construction of one of these properties (Cullen Oaks Phase II, an on-campus participating property) prior to such time, we are required to provide alternative housing to the students with whom we have signed leases. We have not made any arrangements for such alternative housing for this property and we would likely incur significant expenses in the event we provide such housing. If construction is not completed prior to the beginning of the 2005/2006 academic year, students may attempt to break their leases and our occupancy at this property for that academic year may suffer. Similar issues may be present in future development projects.
Our guarantees could result in liabilities in excess of our development fees.
In third party developments, we typically provide guarantees of the obligations of the developer, including development budgets and timely project completion. These guarantees include, among other things, the cost of providing alternate housing for students in the event we do not timely complete a development project. These guarantees typically exclude delays resulting from force majeure and also, in third party transactions, are typically limited in amount to the amount of our development fees from the project. In certain cases, however, our contingent liability under these guarantees has exceeded our development fee from the project and we may agree to such arrangements in the future. Our obligations under alternative housing guarantees typically expire five days after construction is complete. Project cost guarantees are normally satisfied within one year after completion of the project.
Universities have the right to terminate our participating ground leases.
The ground leases through which we own our on-campus participating properties provide that the university lessor may purchase our interest in and assume the management of the facility, with the purchase price calculated at the discounted present cash value of our leasehold interest. The exercise of any such buyout would result in a significant reduction in our portfolio.
We have a significant presence on a single university campus.
The on-campus participating properties at Prairie View A&M University represented approximately 21.0% of our consolidated and combined revenues for 2004. The percentage of consolidated and combined net income attributable to those facilities is minimal. The unlikely event of significantly diminished enrollment at this university could have a negative impact on our ability to achieve our forecasted profitability.
Risks Related to the Real Estate Industry
Our performance and value are subject to risks associated with real estate assets and with the real estate industry.
Our ability to make expected distributions to our stockholders depends on our ability to generate cash revenues in excess of expenses, scheduled debt service obligations and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties. These events include:
  general economic conditions;
 
  rising level of interest rates;
 
  local oversupply, increased competition or reduction in demand for student housing;
 
  inability to collect rent from tenants;
 
  vacancies or our inability to rent space 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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  costs of complying with changes in governmental regulations;
 
  the relative illiquidity of real estate investments;
 
  decreases in student enrollment at particular colleges and universities;
 
  changes in university policies related to admissions; and
 
  changing student demographics.
In addition, periods of economic slowdown or recession, 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 rents or an increased incidence of defaults under existing leases, which would adversely affect us.
Potential losses may not be covered by insurance.
We carry fire, earthquake, terrorism, business interruption, vandalism, malicious mischief, boiler and machinery, commercial general liability and workers’ compensation insurance covering all of the properties in our portfolio under various policies. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. There are, however, certain types of losses, such as property damage from generally unsecured losses such as riots, wars, punitive damage awards or acts of God, that may be either uninsurable or not economically insurable. Some of our properties are insured subject to limitations involving large deductibles and policy limits that may not be sufficient to cover losses. In addition, we may discontinue earthquake, terrorism or other insurance on some or all of our properties in the future if the cost of premiums for any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss.
If we experience a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged and require substantial expenditures to rebuild or repair. In the event of a significant loss at one or more of our properties, the remaining insurance under our policies, if any, could be insufficient to adequately insure our other properties. In such event, securing additional insurance, if possible, could be significantly more expensive than our current policies.
Unionization or work stoppages could have an adverse effect on us.
We are at times required to use unionized construction workers or to pay the prevailing wage in a jurisdiction to such workers. Due to the highly labor intensive and price competitive nature of the construction business, the cost of unionization and/or prevailing wage requirements for new developments could be substantial. Unionization and prevailing wage requirements could adversely affect a new development’s profitability. Union activity or a union workforce could increase the risk of a strike, which would adversely affect our ability to meet our construction timetables.
We could incur significant costs related to government regulation and private litigation over environmental matters.
Under various environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), a current or previous owner or operator of real property may be liable for contamination resulting from the release or threatened release of hazardous or toxic substances or petroleum at that property, and 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 to investigate and clean up such property or other affected property. Such parties are known as potentially responsible parties (“PRPs”). Such environmental laws often impose liability without regard to whether the owner or operator 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 are liable to the

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government as well as to other PRPs who may have claims for contribution. The liability is generally not limited under such laws and could exceed the property’s value and the aggregate assets of the liable party. The presence of contamination or the failure to remediate contamination at our properties may expose us to third party liability for personal injury or property damage, or adversely affect our ability to sell, lease or develop the real property or to borrow using the real property as collateral.
Environmental laws also impose ongoing compliance requirements on owners and operators of real property. Environmental laws potentially affecting us address a wide variety of matters, including, but not limited to, asbestos-containing building materials (“ACBM”), storage tanks, stormwater and wastewater discharges, lead-based paint, wetlands, and hazardous wastes. Failure to comply with these laws could result in fines and penalties or expose us to third party liability. 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.”
Existing conditions at some of our properties may expose us to liability related to environmental matters.
Some of the properties in our portfolio may contain asbestos-containing building materials, or ACBMs. Environmental laws require that ACBMs be properly managed and maintained, and may impose fines and penalties on building owners or operators for failure to comply with these requirements. Also, some of the properties in our portfolio 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 associated with exposure to contaminants, including, but not limited to, petroleum products, hazardous or toxic substances, and asbestos fibers. Also, some of the properties may contain regulated wetlands that 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.
Some of the properties in our portfolio may contain microbial matter such as mold, mildew and viruses. The presence of microbial matter could adversely affect our results of operations. In addition, 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 material 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.
From time to time, the United States Environmental Protection Agency, or EPA, designates certain sites affected by hazardous substances as “Superfund” sites pursuant to CERCLA. Superfund sites can cover large areas, affecting many different parcels of land. Although CERCLA imposes joint and several liability for contamination on property owners and operators regardless of fault, the EPA may chose to pursue PRPs based on their actual contribution to the contamination. PRPs are liable for the costs of responding to the hazardous substances. Commons on Apache, The Village at University and University Village at San Bernardino (which we disposed of in January 2005) are located within federal Superfund sites. EPA designated these areas as Superfund sites because groundwater beneath these areas is contaminated. We have not been named as a PRP with respect to these sites.
Independent environmental consultants conducted Phase I environmental site assessments on all of the owned properties and on-campus participating properties in our existing portfolio. 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

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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 you and such costs or other remedial measures may be material to us.
We may incur environmental liabilities.
We do not carry environmental insurance on our properties. Environmental liability at any of our properties may have a material adverse effect on our financial condition, results of operations, cash flow, the trading price of our common stock or our ability to satisfy our debt service obligations and pay dividends or distributions to our stockholders.
We may incur significant costs complying with the Americans with Disabilities Act and similar laws.
Under the Americans with Disabilities Act of 1990, or the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. Additional federal, state and local laws also may require modifications to our properties, or restrict our ability to renovate our properties. For example, the Fair Housing Amendments Act of 1988, or FHAA, 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. Noncompliance with the ADA or FHAA could result in the imposition of fines or an award or damages to private litigants and also could result in an order to correct any non-complying feature. We cannot predict the ultimate amount of the cost of compliance with the ADA, FHAA or other legislation. If we incur substantial costs to comply with the ADA, FHAA or any other legislation, we could be materially and adversely affected.
We may incur significant costs complying with other regulations.
The properties in our portfolio 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 that would materially and adversely affect us.
Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between our co-venturers and us.
We have in the past co-invested, and anticipate that we will continue in the future to co-invest, with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity. In connection with joint venture investment, we do not have sole decision-making control regarding the property, partnership, joint venture or other entity. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that our partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Our partners or co-venturers also may have economic or other business interests or goals that are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our preferences, policies or objectives. Such investments also will have the potential risk of impasses on decisions, such as a sale, because neither we nor our partners or co-venturers would have full control over the partnership or joint venture. Disputes between us and our partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent

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our officers and/or directors from focusing their time and effort exclusively on our business. Consequently, actions by or disputes with our partners or co-venturers might result in subjecting properties owned by the partnership, joint venture or other entity to additional risk. In addition, we may in certain circumstances be liable for the actions of our partners or co-venturers.
Risks Related to Our Organization and Structure
We are recently organized and have a limited operating history.
We were organized in March 2004 and have a limited operating history. In addition, all of our properties have been acquired or developed by us or our Predecessor Entities within the past nine years and have limited operating histories under current management. Consequently, our historical operating results and the financial data set forth in this prospectus may not be useful in assessing our likely future performance. The operating performance of the properties may decline under our management. We may not be able to generate sufficient cash from operations to make distributions to our stockholders.
We will also be subject to the risks generally associated with the operation of a relatively new business.
To qualify as a REIT, we may be forced to limit the activities of our TRS.
To qualify as a REIT, no more than 20% of the value of our total assets may consist of the securities of one or more taxable REIT subsidiaries, such as our TRS. Certain of our activities, such as our third party development, management and leasing services, must be conducted through our TRS for us to qualify as a REIT. In addition, certain non-customary services must be provided by a taxable REIT subsidiary or an independent contractor. If the revenues from such activities create a risk that the value of our TRS, based on revenues or otherwise, approaches the 20% threshold, we will be forced to curtail such activities or take other steps to remain under the 20% threshold. Since the 20% threshold is based on value, it is possible that the IRS could successfully contend that the value of our TRS exceeds the 20% threshold even if our TRS accounts for less than 20% of our consolidated revenues, income or cash flow. Our on-campus participating properties and our third party services are held by our TRS. Consequently, income earned from our on-campus participating properties and our third party 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.
Our TRS is a taxable REIT subsidiary and 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 believe that our method of operating our TRS 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 our conclusion. In such event we might be forced to change our method of operating our TRS, which could adversely affect us, or our TRS could fail to qualify as a taxable REIT subsidiary, which would likely cause us to fail to qualify as a REIT.
Failure to qualify as a REIT would have significant adverse consequences to us and the value of our stock.
We intend to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes under the Code. If we lose our REIT status, we will face serious tax consequences that would substantially reduce or eliminate the funds available for distribution to stockholders for each of the years involved, because:
  we would not be allowed a deduction for dividends to stockholders in computing our taxable income and such amounts would be subject to federal income tax at regular corporate rates;
 
  we also could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and

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  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 the year during which we were disqualified.
In addition, if we fail to qualify as a REIT, we will not be required to pay dividends to stockholders, and all dividends to stockholders will be subject to tax as ordinary income to the extent of our current and accumulated earnings and profits. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and would adversely affect the value of our common stock.
Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The complexity of these provisions and of the applicable Treasury Regulations that have been promulgated under the Code is greater in the case of a REIT that, like us, holds its assets through a partnership or a limited liability company. 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, including requirements regarding the composition of our assets and “two gross income tests”: (a) at least 75% of our gross income in any year must be derived from qualified sources, such as “rents from real property,” mortgage interest, dividends from other REITs and gains from sale of such assets, and (b) at least 95% of our gross income must be derived from sources meeting the 75% income test above, and other passive investment sources, such as other interest and dividends and gains from sale of securities. Also, we must pay dividends to stockholders aggregating annually at least 90% of our REIT taxable income, excluding any net capital gains. In addition, legislation, new regulations, administrative interpretations or court decisions may adversely affect our investors, our ability to qualify as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other investments.
Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell property as a dealer or if our TRS enters into agreements with us or our tenants on a basis that is determined to be other than an arm’s length basis.
To qualify as a REIT, we may be forced to borrow funds on a short-term basis during unfavorable market conditions.
In order to qualify as a REIT, we are required under the Code to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. Our TRS may, in its discretion, retain any income it generates net of any tax liability it incurs on that income without affecting the 90% distribution requirements to which we are subject as a REIT. Net income of our TRS is included in REIT taxable income and increases the amount required to be distributed, only if such amounts are paid out as a dividend by our TRS. If our TRS distributes any of its after-tax income to us, that distribution will be included in our REIT taxable income. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary acquisition financing, from operating cash flow. Consequently, we will be compelled to rely on third party sources to fund our capital needs. We may not be able to obtain this financing on favorable terms or at all. Any additional indebtedness that we incur will increase our leverage. 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 per share of our common stock.

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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 as a REIT.
Our charter contains restrictions on the ownership and transfer of our stock.
Our charter 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 Code, more than 9.8% (by value or by number of shares, whichever is more restrictive) of the outstanding shares of our common stock or more than 9.8% by value of all our outstanding shares, including both common and preferred stock. We refer to this restriction 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 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 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% 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 thereby subject the stock to the ownership limit. Our charter, however, requires 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. This ownership limit could delay, defer or prevent a change of control or other transaction that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
Certain tax and anti-takeover provisions of our charter and bylaws may inhibit a change of our control.
Certain provisions contained in our charter and bylaws and the Maryland General Corporation Law may discourage a third party from making a tender offer or acquisition proposal to us. If this were to happen, it could delay, deter or prevent a change in control or the removal of existing management. These provisions also may delay or prevent the stockholders from receiving a premium for their shares of common stock over then-prevailing market prices. These provisions include:
  the REIT ownership limit described above;
 
  authorization of the issuance of our preferred shares with powers, preferences or rights to be determined by our board of directors;
 
  the right of our board of directors, without a stockholder vote, to increase our authorized shares and classify or reclassify unissued shares;
 
  advance-notice requirements for stockholder nomination of directors and for other proposals to be presented to stockholder meetings; and
 
  the requirement that a majority vote of the holders of common stock is needed to remove a member of our board of directors for “cause.”
The Maryland business statutes also impose potential restrictions on a change of control of our company.
Various Maryland laws may have the effect of discouraging offers to acquire us, even if the acquisition would be advantageous to stockholders. Our bylaws exempt us from some of those laws, such as the

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control share acquisition provisions, but our board of directors can change our bylaws at any time to make these provisions applicable to us.
We have the right to change some of our policies that may be important to our stockholders without stockholder consent.
Our major policies, including our policies with respect to investments, leverage, financing, growth, debt and capitalization, are determined by our board of directors or those committees or officers to whom our board of directors has delegated that authority. Our board of directors also establishes the amount of any dividends or distributions that we pay to our stockholders. Our board of directors may amend or revise the listed policies, our dividend or distribution payment amounts and other policies from time to time without stockholder vote. Accordingly, our stockholders may not have control over changes in our policies.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believe to be in our best interests and with the care that an ordinary prudent person in a like position would use under similar circumstances. In addition, our charter eliminates our directors’ and officers’ 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 bylaws require us to indemnify directors and officers for liability resulting from actions taken by them in those capacitates to the maximum extent permitted by Maryland law. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our directors and officers.
Our success depends on key personnel whose continued service is not guaranteed.
We are dependent upon the efforts of our key personnel, particularly William C. Bayless, Jr., our President and Chief Executive Officer, Brian B. Nickel, our Executive Vice President, Chief Financial Officer and Secretary, James C. Hopke, Jr., our Executive Vice President and Chief Investment Officer, and Greg A. Dowell, our Executive Vice President and Chief of Operations. Mr. Bayless has directed the company’s key business segments since inception and possesses nearly 20 years of student housing development and management experience. Messrs. Bayless, Nickel, Hopke and Dowell all have substantial industry reputations that attract business and investment opportunities and assist us in negotiations with lenders, universities and industry personnel. Jason R. Wills, our Senior Vice President– Marketing and Business Development, and Brian N. Winger, our Senior Vice President– Development, both have strong industry reputations and specialized experience, which aid us in developing, acquiring and managing our properties. The loss of the services of any of such personnel could materially and adversely affect us.
The majority of our management have limited experience operating a REIT or a public company.
We have a limited operating history as a REIT or a public company. Our board of directors and executive officers will have overall responsibility for our management. While our executive and senior officers have extensive experience in real estate marketing, development, management and finance, they have limited prior experience in operating a business in accordance with the Code requirements for qualification as a REIT, operating a public company or complying with the Securities and Exchange Commission, or the SEC, regulations. Failure to qualify as a REIT would have an adverse effect on our cash available for distribution to our stockholders. Failure to properly comply with SEC regulations and requirements could impair our ability to operate as a public company.

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  In addition to the underwriting discounts to be received by Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and KeyBanc Capital Markets, a division of McDonald Investments Inc., their affiliates will receive benefits from this Offering.
Affiliates of Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and KeyBanc Capital Markets, a division of McDonald Investments Inc., four of our underwriters, are lenders under our revolving credit facility. As of June 17, 2005, approximately $50.2 million of borrowings were outstanding under this facility. We intend to repay all of the outstanding borrowings under our revolving credit facility with a portion of the net proceeds of this Offering and, upon application of the net proceeds from this Offering, each lender will receive its proportionate share of the amount repaid. See “Use of Proceeds.”
Risks Related to this Offering
We may not be able to make distributions to our stockholders in the future.
We are required to distribute 90% of our REIT taxable income (excluding capital gains) on an annual basis in order to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to common stockholders and PIU holders. If we do not generate revenues from our properties and third party development and management services sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow will decrease. This could have an adverse effect on our ability to pay distributions to our stockholders. We may be required to use borrowings under the credit facility, if necessary, to meet REIT distribution requirements and qualify as a REIT. However, our revolving credit facility contains covenants that restrict our ability to pay distributions or other amounts to our stockholders unless certain tests are satisfied and also contains certain provisions restricting our ability to draw funds under the facility. We expect to incur additional indebtedness through borrowings under our credit facility to fund future property development, acquisitions and other working capital needs, which may include the payment of distributions to our stockholders. All distributions are at the discretion of our board of directors. The board of directors considers market factors and our performance in addition to REIT requirements in determining distribution levels. To the extent we use our working capital or borrowings under our revolving credit facility to fund our distributions, our financial condition and our ability to access these funds for other purposes, such as the expansion of our business or future distributions, could be adversely affected. Any such distributions from working capital or borrowings may represent a return of capital for federal income tax purposes. We expect that approximately 60% of our 2005 annual distribution will represent a return of capital for federal income tax purposes.
Our distributions will not be eligible for the recent lower tax rate on dividends except in limited situations.
Unlike dividends received from a corporation that is not a REIT, our distributions to individual stockholders generally will not be eligible for the recent lower tax rate on dividends except in limited situations.
The public offering price of our common stock in this Offering may not be indicative of the market price of our common stock after this Offering and our stock price may be volatile.
The public offering price of our common stock was determined in consultation with the underwriters and may not be indicative of the market price for our common stock after this Offering. The market price of our common stock could be subject to significant fluctuations after this Offering and may decline below the public offering price. You may not be able to resell your shares at or above the public offering price or at all.
The stock market in general has experienced extreme volatility that has been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.

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Certain members of our senior management will receive an economic benefit from this Offering.
In conjunction with our IPO, our then executive officers and certain members of senior management received 121,000 profits interest units in our Operating Partnership, representing approximately a 1% limited partnership interest in the Operating Partnership at that time. PIUs are a special class of partnership interests in the Operating Partnership. Each PIU awarded is deemed equivalent to an award of one share of our common stock under our 2004 incentive award plan, reducing availability for other equity awards on a one-for-one basis. The consummation of this Offering will constitute a book-up event and thereby automatically convert the PIUs into an equal number of common units of the Operating Partnership.
Market interest rates may have an effect on the value of our common stock.
One of the factors that will influence the price of our common stock will be the dividend yield on our common stock (as a percentage of the price of our common stock) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common stock to expect a higher dividend yield in order to maintain their investment. Higher interest rates also would likely increase our borrowing costs and potentially decrease funds available for distribution to our stockholders. Thus, higher market interest rates could cause the market price of our common stock to decrease.
The number of shares available for future sale could adversely affect the market price of our common stock.
We cannot predict whether future issuances of shares of our common stock or the availability of shares for resale in the open market will decrease the market price per share of our common stock. Sales of substantial amounts of shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock, such as units, or the perception that such sales might occur could adversely affect the market price of the shares of our common stock.
The exercise of the underwriters’ overallotment option, the exchange of units for common stock, the exercise of any options or the vesting of any restricted stock granted to certain directors, executive officers and other employees under our incentive award plan, the issuance of our common stock or units in connection with property, portfolio or business acquisitions and other issuances of our common stock or securities convertible into or exchangeable or exercisable for our common stock could have an adverse effect on the market price of the shares of our common stock, and the existence of units, options, shares of our common stock exercisable upon conversion of, or exchange or exercise for, other securities or reserved for issuance as restricted shares of our common stock or upon exchange of units may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future sales of shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock may be dilutive to existing common stockholders.

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FORWARD-LOOKING STATEMENTS
We make statements in this prospectus that are forward-looking statements. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
  changing university admission and housing policies;
 
  adverse economic or real estate developments;
 
  general economic conditions;
 
  future terrorist attacks in the U.S. or hostilities involving the U.S.;
 
  defaults on or non-renewal of leases by student-tenants;
 
  increased interest rates and operating costs;
 
  debt levels and property encumbrances;
 
  our failure to obtain necessary third party financing;
 
  decreased rental rates or increased vacancy rates resulting from competition or otherwise;
 
  difficulties in identifying properties to acquire and completing acquisitions;
 
  our failure to successfully operate acquired properties and operations;
 
  our failure to successfully develop properties in a timely manner;
 
  our failure to maintain our status as a REIT;
 
  environmental costs, uncertainties and risks, especially those related to natural disasters;
 
  financial market fluctuations; and
 
  changes in real estate and zoning laws and increases in real property tax rates.
For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section above entitled “Risk Factors.”

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USE OF PROCEEDS
Assuming an offering price of $21.97 per share, which was the last reported sales price of our common stock on June 17, 2005, we estimate we will receive gross proceeds from this Offering of $74.7 million and approximately $85.9 million if the underwriters’ overallotment option is exercised in full. After deducting the underwriting discount and estimated expenses of this Offering, we expect net proceeds from this Offering of approximately $69.2 million and approximately $79.9 million if the underwriters’ overallotment option is exercised in full.
We intend to use the net proceeds from this Offering to fund the acquisition and development of student housing properties. In the interim, we intend to use $50.2 million to repay the outstanding balance of our revolving credit facility and the remaining $19.0 million for working capital and general corporate purposes. See “Risk Factor—Risks Related to Our Organization and Structure—In addition to the underwriting discounts to be received by Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and KeyBanc Capital Markets, a division of McDonald Investments Inc., their affiliates will receive benefits from this Offering.”
Our revolving credit facility bears interest at a variable rate, at our option, based upon a base rate of (i) one-, two-, three- or six-month LIBOR or (ii) the higher of the lenders’ prime rate and the federal funds rate plus 0.5%, plus, in each case, a spread based upon our total leverage. As of March 31, 2005, the balance outstanding on our revolving credit facility bore interest at a weighted average rate of 4.31% per annum. This facility will mature in August 2007.
Pending application of any portion of the net Offering proceeds, we will invest it in interest-bearing accounts and short-term, interest-bearing securities as is consistent with our intention to maintain our qualification for taxation as a REIT. Such investments may include, for example, obligations of the Government National Mortgage Association, other government and governmental agency securities, certificates of deposit and interest-bearing bank deposits.

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DISTRIBUTION POLICY
We are required to distribute 90% of our REIT taxable income, excluding capital gains, on an annual basis to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to common stockholders and PIU holders. All such distributions are at the discretion of our board of directors. We may be required to use borrowings under our credit facility, if necessary and to the extent permitted thereunder, to meet REIT distribution requirements and qualify as a REIT and otherwise fund the remaining amounts of any distributions. The board of directors considers market factors and our performance in addition to REIT requirements in determining distribution levels.
On May 11, 2005, we declared a distribution per share of common stock of $0.3375, which was paid on May 31, 2005 to all common stockholders of record as of May 19, 2005. At the same time, we paid an equivalent amount per unit to holders of PIUs and restricted stock awards. These distributions equate to an annualized amount of $1.35 per share and represent a 6.1% yield based on the June 17, 2005 closing share price of $21.97 per share.
If we do not generate revenues from our properties and third party development and management services sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow will decrease. This could have an adverse effect on our ability to pay distributions to our stockholders. We may be required to use borrowings under the credit facility, if necessary, to meet REIT distribution requirements and qualify as a REIT. However, our revolving credit facility contains covenants that restrict our ability to pay distributions or other amounts to our stockholders unless certain tests are satisfied and also contains certain provisions restricting our ability to draw funds under the facility. All distributions are at the discretion of our board of directors. The board of directors considers market factors and our performance in addition to REIT requirements in determining distribution levels. To the extent we use our working capital or borrowings under our revolving credit facility to fund our distributions, our financial condition and our ability to access these funds for other purposes, such as the expansion of our business or future distributions, could be adversely affected. Any such distributions from working capital or borrowings may represent a return of capital for federal income tax purposes. We expect that approximately 60% of our 2005 annual distribution will represent a return of capital for federal income tax purposes.
Availability under our revolving credit facility is limited to an “aggregate borrowing base amount” equal to the lesser of (i) 65% of the value of certain of our properties, calculated as set forth in the credit facility, and (ii) the adjusted net operating income from these properties divided by a formula amount. As of March 31, 2005, the borrowing base amount was $65.1 million.
Our revolving credit facility contains customary affirmative and negative covenants and also contains financial covenants that, among other things, require us to maintain certain minimum ratios of “EBITDA” (earnings before interest, taxes, depreciation and amortization) for interest expense and fixed charges. Before June 30, 2006, we may not pay distributions that exceed 100% of our funds from operations for any four consecutive quarters. After June 30, 2006, we may not pay distributions that exceed 95% of our funds from operations for any four consecutive quarters. The financial covenants also include consolidated net worth and leverage ratio tests. As of March 31, 2005, we were in compliance with all such covenants.
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 net taxable income, including capital gains. For more information, please see “Federal Income Tax Considerations.” We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs. However, under some circumstances, we may be required to pay distributions in excess of cash available for distribution in order to meet these distribution requirements and we may need to borrow funds to pay the excess portion.

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PRICE RANGE OF COMMON STOCK
Our common stock is listed and traded on the New York Stock Exchange under the symbol “ACC.” As of June 17, 2005, there were approximately 100 holders of record of our common stock. Our common stock commenced trading on August 17, 2004. The following table sets forth, for the periods indicated, the high and low sales prices per share for our common stock:
                 
    High   Low
         
2004
               
Third quarter (August 17 through September 30)
  $ 19.05     $ 17.00  
Fourth quarter
    23.06       18.50  
2005
               
First quarter
  $ 22.75     $ 19.09  
Second quarter (through June 17)
    22.45       19.04  
On June 17, 2005, the closing price of our common stock on the New York Stock Exchange was $21.97 per share.

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CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2005 on an actual basis and on a pro forma basis to give effect to this Offering and the use of the net proceeds from this Offering as set forth in “Use of Proceeds.” You should read this table in conjunction with “Use of Proceeds,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources” and our consolidated financial statements and the notes to our financial statements appearing elsewhere in this prospectus.
                     
    (in thousands)
     
    As of March 31, 2005
     
    Actual   Pro Forma
         
    (Unaudited)
Cash and cash equivalents
  $ 6,425     $ 42,038  
             
Debt:
               
 
Revolving credit facility
  $ 33,600     $ —   
 
Mortgage, loans and bonds payable
    275,829       275,829  
 
Unamortized debt premiums
    4,956       4,956  
             
   
Total debt
    314,385       280,785  
Minority interests
    2,649       2,649  
Stockholders’ Equity:
               
 
Common stock, $.01 par value, 800,000,000 shares authorized, 12,615,000 shares issued and outstanding actual, 16,015,000 shares issued and outstanding pro forma
    126       160  
 
Additional paid-in capital
    135,150       204,329  
 
Accumulated earnings and distributions
    5,717       5,717  
 
Accumulated other comprehensive income
    387       387  
             
   
Total stockholders’ equity
    141,380       210,593  
             
 
Total capitalization
  $ 458,414     $ 494,027  
             

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SELECTED FINANCIAL DATA
The following tables set forth our summary selected financial and operating data on a consolidated historical basis for us and on a combined historical basis for our Predecessor Entities. Results for the year ended December 31, 2004 represent the combined historical data for our Predecessor Entities for the period from January 1, 2004 to August 16, 2004 as well as our consolidated results for the period from August 17, 2004 to December 31, 2004. Our consolidated results reflect our post-IPO structure as a REIT, including the operations of the TRS, which was not present in the operations of our Predecessor Entities. The combined historical financial information for our Predecessor Entities includes:
  the development and management service operations and real estate operations of American Campus Communities, L.L.C., one of the Predecessor Entities;
 
  the real estate operations of RAP SHP and its subsidiaries, including The Village at Riverside, which we ceased owning after the completion of the IPO, and Coyote Village, which was transferred to Weatherford College in April 2004; and
 
  the joint venture properties and operations of American Campus– Titan, LLC and American Campus– Titan II, LLC.
You should read the following summary selected financial data in conjunction with the consolidated and combined historical financial statements and the related notes and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this prospectus.
Our unaudited historical consolidated balance sheet information as of March 31, 2005 and consolidated and combined statements of operations for the three months ended March 31, 2005 and 2004 are derived from our unaudited historical combined financial statements, which we believe include all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. Our results of operations for the interim period ended March 31, 2005 are not necessarily indicative of the results to be obtained for the full fiscal year.
The unaudited pro forma condensed consolidated and combined statements of operations for the three months ended March 31, 2005 and for the year ended December 31, 2004 are presented as if we had acquired Exchange at Gainesville (acquired March 2005), City Parc at Fry Street (acquired March 2005) and the five-property Proctor Portfolio (acquired February 2005) as of January 1, 2004. It was also assumed that our IPO transactions all had occurred as of January 1, 2004. The pro forma adjustments include the related repayment of certain debt and the acquisition of minority ownership of certain assets. All such transactions are reflected on our March 31, 2005 consolidated balance sheet, which is included elsewhere in this prospectus.

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The following summary unaudited financial data should be read together with the pro forma condensed consolidated and combined statements of operations and our historical financial statements and related notes included elsewhere in this prospectus. The pro forma condensed consolidated and combined statements of operations are unaudited and are not necessarily indicative of what the actual results of operations would have been had we acquired the properties or consummated the IPO as of January 1, 2004, nor do they purport to represent the results of our operations for future periods. While such unaudited pro forma condensed consolidated and combined financial statements are based on adjustments that we deem appropriate and that were factually supported based on currently available data, the pro forma information may not be indicative of what actual results would have been, nor does this information present our financial results or condition for future periods.
Statements of Operations Information:
                                                                           
    (in thousands, except share and per share data)
     
    Three Months Ended    
    March 31,   Years Ended December 31,
         
    Historical       Historical    
        Pro Forma       Pro Forma
    2005   2004   2005   2004   2003   2002   2001   2000   2004
                                     
    (Unaudited)   (Unaudited)
Revenues
  $ 19,541     $ 15,352     $ 22,325     $ 60,823     $ 57,136     $ 52,131     $ 40,752     $ 25,126     $ 76,623  
Income (loss) from continuing operations
    2,311       1,585       2,646       (1,572 )     (967 )     (2,753 )     (3,300 )     (1,869 )     (1,785 )
Discontinued operations:
                                                                       
 
(Loss) income attributable to discontinued operations
    (2 )     (55 )             272       7       319       361       (3 )        
 
Gain (loss) from disposition of real estate
    5,883       —                (39 )     16       295       —        —           
Net income (loss)
    8,192       1,530               (1,339 )     (944 )     (2,139 )     (2,939 )     (1,872 )        
Per Share and Distribution Data:(1)
                                                                       
Income per diluted share:
                                                                       
 
Income from continuing operations
  $ 0.19             $ 0.21     $ 0.10                                     $ (.14 )
 
Discontinued operations
    0.46                       0.05                                          
                                                       
 
Net income
  $ 0.65                     $ 0.15                                          
Cash distributions declared per share/unit
    0.3375                       0.1651                                          
Cash distributions declared
    4,277                       2,104                                          
Balance Sheet Data:
                                                   
    (in thousands)
     
    As of   As of December 31,
    March 31,    
    2005   2004   2003   2002   2001   2000
                         
    (Unaudited)                    
Total assets
  $ 486,487     $ 367,628     $ 330,566     $ 307,658     $ 295,637     $ 217,151  
Debt
    314,385       201,014       267,518       249,706       234,449       178,442  
Stockholders’ and Predecessor entities owners’ equity(2)
    141,380       138,229       27,658       35,526       40,572       25,609  
Selected Owned Property Information:
                                               
 
Owned properties
    24       18       14       14       13       10  
 
Units
    5,163       4,317       3,567       3,459       3,377       2,781  
 
Beds
    15,593       12,955       10,546       10,336       10,027       8,232  
 
Occupancy
    96.0 %     97.1 %     91.5 %     91.0 %     93.5 %     93.3 %

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    (in thousands)
     
    Three Months    
    Ended    
    March 31,   Years Ended December 31,
         
    2005   2004   2004   2003   2002   2001   2000
                             
    (Unaudited)                    
Cash Flow Information:
                                                       
 
Net cash provided by operating activities
  $ 5,713     $ 5,237     $ 17,293     $ 6,862     $ 7,647     $ 5,338     $ 3,577  
 
Net cash used in investing activities
    (58,853 )     (19,213 )     (63,621 )     (33,738 )     (21,678 )     (68,540 )     (87,652 )
 
Net cash provided by financing activities
    55,515       13,004       45,151       21,537       11,646       72,832       84,215  
Funds From Operations (“FFO”):
                                                       
 
Net income (loss)
  $ 8,192     $ 1,530     $ (1,339 )   $ (944 )   $ (2,139 )   $ (2,939 )   $ (1,872 )
 
Minority interests
    87       (21 )     (100 )     (16 )     (30 )     (110 )     (20 )
 
(Gain) loss from disposition of real estate
    (5,883 )     —        39       (16 )     (295 )     —        —   
 
Real estate related depreciation and amortization
    3,326       2,277       10,009       8,937       8,233       6,807       4,188  
                                           
 
Funds from operations(3)(4)
  $ 5,722     $ 3,786     $ 8,609     $ 7,961     $ 5,769     $ 3,758     $ 2,296  
                                           
 
(1)  Represents per share information and cash distributions declared during the period from August 17, 2004 through March 31, 2005.
 
(2)  Information as of March 31, 2005 and December 31, 2004 reflects our stockholders’ equity as a result of the IPO while previous years reflect the equity of the owners of our Predecessor Entities.
 
(3)  As defined by the National Association of Real Estate Investment Trusts or NAREIT, funds from operations or FFO represents income (loss) before allocation to minority interest (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.
  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our 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.
(4)  When considering our FFO, we believe it is also a meaningful measure of our performance to exclude certain revenues and expenses from our on-campus participating properties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Funds from Operations.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial statements, related notes and other financial information appearing elsewhere in this prospectus.
Overview
Our Company and Our Business
We are one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned, managed and developed. As of March 31, 2005, our total owned and managed portfolio included 43 properties that represented approximately 26,900 beds in approximately 9,700 units. We are a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties.
As of March 31, 2005, our property portfolio consisted of 24 high-quality student housing properties containing 15,600 beds in approximately 5,200 units consisting of 19 off-campus student housing properties within close proximity to 22 colleges and universities in nine states, and five on-campus participating properties owned though ground/facility leases with the respective university systems. These communities contain modern housing units, offer resort-style amenities and are supported by a classic resident assistant system and other student-oriented programming.
We also provide third party services to colleges and universities for the management and development of on-campus student housing. We manage 19 properties on a third party basis primarily for colleges, universities and financial institutions. These third party managed properties contain approximately 11,300 beds in approximately 4,500 units. We provided development and construction management services for 13 of these properties. Our third party management services are typically provided pursuant to multi-year management contracts that have an initial term that ranges from two to five years.
Our third party development and construction management services clients for student housing properties that include universities, charitable foundations and others. We have generally developed student housing properties for these clients and, a majority of the time, have been retained to manage these properties following their opening. As of March 31, 2005, development fees of approximately $5.1 million remained to be earned by us with respect to contracted third party development projects. The following table provides certain information with respect to third party properties under development as of March 31, 2005:
                                   
    (in thousands)
     
    Total       Balance to be    
    Contractual   Fees Previously   Earned and    
    Fee   Earned and   Recognized in   Scheduled
Property   Amount   Recognized   2005 and 2006   Completion
                 
Saint Leo University Phase II
  $ 375     $ 199     $ 176       Aug 2005  
Vista del Campo Phase II
    3,501       168       3,333       Aug 2006  
West Virginia University—
pre development services
    400 (1)     370       30       Jun 2005  
Fenn Tower Renovation
    1,509       10       1,499       Aug 2006  
Lamar University Dining Hall
    110       22       88       Nov 2005  
                         
 
Total
  $ 5,895     $ 769     $ 5,126          
                         
 
(1)  Contractual fee amount is shown net of approximately $0.6 million of costs anticipated to be incurred to complete the project.
In addition, as of March 31, 2005, we have been selected to perform construction administration services related to a student housing property for West Virginia University. These services provide a net construction administration fee of approximately $0.3 million and are anticipated to commence in August

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2005. We have also received a “Notice of Intent to Award” from Arizona State University indicating that we have been selected to provide design, development and management of student housing on the Tempe Campus. In addition, we have also been selected by Hope International University in Fullerton, California, to design and oversee a comprehensive redevelopment of its campus, including the development of residence halls, student apartments and faculty housing. Subject to the successful structuring and closing of the Arizona State and Hope transactions, we anticipate that the projects will commence construction during the second or third quarter of 2006.
The net operating income of our student housing communities, which is one of the financial measures that we use to evaluate community performance, is affected by the demand and supply dynamics within our markets, which drives our rental rates and occupancy levels, and is affected by our ability to control operating costs. Our overall operating performance is also impacted by the general availability and cost of capital and the performance of our newly developed and acquired student housing communities as to which there may be little or no operating history. We seek to create long-term stockholder value by accessing capital on cost effective terms, deploying that capital to develop, redevelop and acquire student housing communities and selling communities when they no longer meet our long-term investment strategy and when market conditions are favorable.
We believe that the ownership and operation of student housing communities in close proximity to selected colleges and universities present attractive investment opportunities for us due to a number of factors positively impacting the student housing market in the United States today. We intend to continue to execute our strategy of acquiring and developing high quality, modern student housing communities in close proximity to major universities, which feature a differentiated product offering, with locations in student housing sub-markets that have barriers to entry. In addition, our strategy includes identifying properties with barriers to entry that are projected to experience significant increases in enrollment and/or are under-serviced in terms of existing on and/or off-campus student housing. While fee revenue from our third party development, construction management and property management services allows us to develop strong and key relationships with colleges and universities, this area has over time become a smaller portion of our operations due to the continued focus on and growth of our owned property portfolio. Nevertheless, we believe these services continue to provide synergies with respect to our ability to identify, close and successfully operate student housing properties.
Acquisitions
In March 2005, we acquired an off-campus student housing property (Exchange at Gainesville, to be renamed) consisting of 1,044 beds in 396 units located near the University of Florida campus in Gainesville, Florida, for a purchase price of $47.5 million. In addition, we anticipate spending approximately $1.1 million in closing and other external transaction costs, including capital expenditures necessary to bring the property up to our operating standards. We also anticipate spending approximately $45,000 of initial integration expenses to bring the property up to our operating standards. We entered into a fixed-rate mortgage loan in the amount of $38.8 million in connection with this acquisition.
In March 2005, we acquired an off-campus student housing property (City Parc at Fry Street) consisting of 418 beds in 136 units located near the University of North Texas in Denton, Texas, for a purchase price of $19.2 million. In addition, we anticipate spending $0.4 million in closing and other external transaction costs, including capital expenditures necessary to bring the property up to our operating standards. We also anticipate spending approximately $35,000 of initial integration expenses to bring the property up to our operating standards. We assumed approximately $11.8 million of fixed-rate mortgage debt in connection with this acquisition.
In February 2005, we acquired a portfolio of five off-campus student housing properties (the “Proctor Portfolio”) for a purchase price of approximately $53.5 million. Four of the properties are located in Tallahassee, Florida and one property is located in Gainesville, Florida. These five communities contained 1,656 beds in 446 units. We anticipate spending approximately $1.7 million in closing and other external transaction costs, including capital expenditures necessary to bring the property up to our operating

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standards. We also anticipate spending approximately $0.1 million of initial integration expenses to bring the property up to our operating standards. We assumed approximately $35.4 million of fixed-rate mortgage debt in connection with this acquisition.
Disposition
In November 2004, California State University— San Bernardino exercised its option to purchase the University Village at San Bernardino off-campus student housing property for an aggregate purchase price of approximately $28.3 million. This transaction was consummated in January 2005, resulting in net proceeds of approximately $28.1 million. The resulting gain on disposition of approximately $5.9 million is included in discontinued operations in the accompanying consolidated statement of operations for the three months ended March 31, 2005.
Owned Development Activities
We are currently in the process of constructing one owned off-campus property and are in pre-development of two additional off-campus owned properties. We are also currently constructing one owned on-campus participating property. We anticipate that the total pre-development and development cost relating to these activities will be approximately $150.3 million. As of March 31, 2005, we have incurred development costs of approximately $26.1 million in connection with these properties, with the remaining development costs estimated at $124.2 million. The activities are described below:
We acquired a land parcel near the State University of New York— Buffalo and commenced development of an owned off-campus property containing 828 beds in 269 units. Total development cost is estimated to be $36.1 million. This property is currently in the final stages of construction and is pre-leased to 100% occupancy for its upcoming opening in August 2005. As of March 31, 2005, the project was approximately 68% complete, and we anticipate incurring remaining development costs of approximately $14.8 million.
We are in the later stages of design and pre-development on two owned off-campus properties with total anticipated development costs of approximately $97.2 million. One project is located in Newark, New Jersey near the campuses of the New Jersey Institute of Technology, Rutgers University and Essex County Community College. We anticipate development costs on this property to total approximately $62.3 million and plan to own this property through a joint venture that we will control with Titan Investments, a partner with whom we have previously developed four off-campus student housing properties. As of March 31, 2005, we have incurred approximately $0.5 million of pre-development costs related to this project. The second property is located in close proximity to Texas A&M University in College Station, Texas, and we estimate the total development costs on this property to be approximately $34.9 million. Both developments are currently progressing through their respective entitlement and municipal approval processes and are contingent upon receiving all necessary approvals. Depending upon the timeliness of these approvals, we plan to commence construction in Summer of 2005 for an August 2006 completion or to commence construction in Summer of 2006 for an August 2007 completion.
Our Cullen Oaks Phase II on-campus participating property, located on the campus of the University of Houston, is currently under construction with total development costs estimated to be $17.0 million. The project is scheduled to be completed in August 2005 in connection with the 2005/2006 academic year. As of March 31, 2005, the project was approximately 23% complete, and we anticipate incurring remaining development costs of approximately $12.7 million.
Structure of On-Campus Participating Properties
At our on-campus participating properties, the subject universities own both the land and improvements. We then have a leasehold interest under a ground/facility lease. Under the lease, we receive an annual distribution representing 50% of these properties’ net cash available for distribution after payment of operating expenses (which includes our management fees), debt service (which includes repayment of principal) and capital expenditures. We also manage these properties under multi-year management agreements and are paid a management fee representing 5% of receipts.

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We do not have access to the cash flows and working capital of these participating properties except for the annual net cash distribution described above. Additionally, a substantial portion of these properties’ cash flow is dedicated to capital reserves required under the applicable property indebtedness and to the amortization of such indebtedness. These amounts do not increase our economic interest in these properties since our interest, including our right to share in the net cash available for distribution from the properties, terminates upon the amortization of their indebtedness. Our economic interest in these properties is therefore limited to our interest in the annual net cash distribution described above and management fees from these properties. Accordingly, when considering these properties’ contribution to our operations, we focus upon our share of these properties’ net cash available for distribution and the management fees that we receive from these properties, rather than upon their contribution to our gross revenues and expenses for financial reporting purposes.
The following table reflects the actual contribution to our consolidated/combined net income of our on-campus participating properties for the years ended December 31, 2004, 2003 and 2002 and the three months ended March 31, 2005 and 2004. These results include the contribution of certain on-campus participating properties that were developed by us and by pre-arrangement transferred to the university after we had secured the necessary financing:
                                           
    (in thousands)
     
    Three Months Ended    
    March 31,   Year Ended December 31,
         
    2005   2004   2004   2003   2002
                     
Revenues
  $ 5,491     $ 5,608     $ 17,730     $ 17,002     $ 16,670  
Direct operating expenses(1)
    1,722       1,785       7,621       7,517       7,273  
Amortization
    879       854       3,532       3,271       3,152  
Amortization of deferred financing costs
    46       66       240       180       160  
Ground/facility lease expense
    212       175       846       584       664  
                               
 
Net operating income
    2,632       2,728       5,491       5,450       5,421  
Interest income
    25       6       53       30       67  
Interest expense
    (1,347 )     (1,449 )     (5,547 )     (5,293 )     (5,291 )
Other nonoperating income
    —        —        234       —        —   
                               
 
Net income(2)
  $ 1,310     $ 1,285     $ 231     $ 187     $ 197  
                               
 
(1)  Excludes the property management fees described below. This expense and the corresponding fee revenue recognized by us have been eliminated in consolidation/combination. Also excludes allocation of expenses related to corporate management and oversight.
 
(2)  Includes the results of Coyote Village, which was transferred to Weatherford College in April 2004. Operations at this property are classified as discontinued operations for all relevant periods in the consolidated and combined financial statements included elsewhere in this prospectus. Excludes income taxes associated with these properties, which are owned by our TRS subsequent to the IPO.
We earned $0.9 million, $0.8 million and $0.8 million in management fees under these arrangements for the years ended December 31, 2004, 2003 and 2002, respectively, and $0.3 million for each of the three-month periods ended March 31, 2005 and 2004. Additionally, our share of the net cash flows of these properties for the years ended December 31, 2004, 2003 and 2002 was $0.8 million, $0.5 million and $0.7 million, respectively, and $0.2 million for each of the three-month periods ended March 31, 2005 and 2004.
Our Recent Formation as a REIT
We were formed to succeed the business of our predecessor entities (the “Predecessor Entities”), which were a combination of real estate entities under common ownership and voting control collectively doing business as American Campus Communities, L.L.C. and Affiliated Student Housing Properties, entities

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engaged in the student housing business since 1993. We were incorporated in Maryland on March 9, 2004. Additionally, American Campus Communities Operating Partnership, L.P., our operating partnership (the “Operating Partnership”), was formed and our taxable REIT subsidiary (“TRS”) was incorporated in Maryland on July 14, 2004 and August 17, 2004, respectively, each in anticipation of our initial public offering of common stock (the “IPO”). The IPO was consummated on August 17, 2004, concurrent with the consummation of various formation transactions, and consisted of the sale of 12,100,000 shares of our common stock at a price per share of $17.50, generating gross proceeds of approximately $211.8 million. The aggregate proceeds to us, net of the underwriters’ discount and offering costs, were approximately $189.4 million. In connection with the exercise of the underwriters’ over-allotment option on September 15, 2004, we issued an additional 515,000 shares of common stock at the IPO price per share, generating an additional $9.0 million of gross proceeds and $8.4 million in net proceeds after the underwriters’ discount. Our operations commenced on August 17, 2004 after completion of the IPO and the formation transactions, and are conducted substantially through the Operating Partnership and its wholly owned subsidiaries, including the TRS.
In connection with the IPO, we completed the following formation transactions:
  •  Redeemed 100% of the ownership interests of the Predecessor Entities in RAP Student Housing Properties L.L.C. (“RAP SHP”) for approximately $80.1 million.
 
  Acquired the minority ownership interest of Titan Investments II (“Titan”) in certain owned off-campus properties in exchange for approximately $5.7 million.
 
  Repaid certain construction and permanent indebtedness totaling approximately $105.5 million.
 
  Distributed The Village at Riverside and certain other non-core assets to the Predecessor Entities.
 
  •  Entered into a $75 million senior secured revolving credit facility under which our ability to borrow is subject to certain conditions and the satisfaction of specified financial covenants, which credit facility was subsequently amended.
Our Predecessor Entities provided certain services to residents that we are not permitted to provide under IRS regulations relating to REITs. Therefore, in conjunction with our formation, we restructured our operations relative to the provision of these services. Subsequent to the commencement of our operations as a REIT, these resident services have been provided by our TRS, resulting in lower rental revenue and higher resident services revenue.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated and combined financial statements and related notes. In preparing these 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 consolidated and combined financial statements, giving due consideration to materiality. It is possible that the ultimate outcome anticipated by management in formulating its estimates may not be 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 could 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.
Allocation of Fair Value to Acquired Properties
The price that we pay to acquire a property is impacted by many factors, including the condition of the buildings and improvements, the occupancy of the building, favorable or unfavorable financing, and numerous other factors. Accordingly, we are required to make subjective assessments to allocate the

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purchase price paid to acquire investments in real estate among the assets acquired and liabilities assumed based on our estimate of the fair values of such assets and liabilities. This includes, among other items, determining the value of the buildings and improvements, land, in-place tenant leases, and any debt assumed from the seller. Each of these estimates requires a great deal of judgment and some of the estimates involve complex calculations. Our calculation methodology is summarized in Note 2 to our consolidated and combined financial statements included elsewhere in this prospectus.
These allocation assessments have a direct impact on our results of operations because if we were to allocate more value to land there would be no depreciation with respect to such amount or if we were to allocate more value to the buildings as opposed to allocating to the value of in-place tenant leases, this amount would be recognized as an expense over a much longer period of time, since the amounts allocated to buildings are depreciated over the estimated lives of the buildings whereas amounts allocated to in-place tenant leases are amortized over the terms of the leases (generally less than one year).
Revenue and Cost Recognition of Third Party Development and Management Services
Costs associated with the pursuit of third party development and management service contracts are expensed as incurred until such time as we have been notified of a contract award or otherwise believe that it is probable a contract will be awarded. At such time, the reimbursable portion of such costs are recorded as receivables with the remaining portion deferred and expensed in relation to the revenues earned on such contracts. Development revenues are recognized and related costs (including the costs of our development personnel involved in the project) deferred and expensed using the percentage of completion method as determined by construction costs incurred relative to the total estimated construction costs. Fees received in excess of those recognized are reflected as deferred development and construction revenue. Revenues recognized in excess of amounts received are included in other assets. Incentive fees are recognized when the project is complete and the incentive amount has been confirmed by an independent third party.
Third party management fees are generally received and recognized on a monthly basis and are computed as a percentage of property receipts, revenues or a fixed monthly amount, in accordance with the applicable management contract. Incentive management fees are recognized when the contractual criteria have been met.
Student Housing Rental Revenue Recognition and Accounts Receivable
Student housing rental revenue is recognized on a straight-line basis over the term of the contract. Ancillary and other property related income is recognized in the period earned. In estimating the collectibility of our accounts receivable, we analyze specific resident receivables, historical bad debts, and current economic trends. These estimates have a direct impact on our net income, as an increase in our allowance for doubtful accounts reduces our net income.
Long-Lived Assets-Impairment
On a periodic basis, management is required to assess whether there are any indicators that the value of our real estate properties may be impaired. A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. These estimates of cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property, thereby reducing our net income.

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Long-Lived Assets-Held For Sale
Long-lived assets to be disposed of are classified as held for sale in the period in which all of the following criteria are met:
  Management, having the authority to approve the action, commits to a plan to sell the asset;
 
  The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;
 
  An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated;
 
  The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year;
 
  The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and
 
  Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Discontinued Operations
When material, the results of operations of a property that has either been disposed of, distributed, or is classified as held for sale is reported in discontinued operations if both of the following conditions are met: (a) the operations and cash flows of the component have been (or will be) eliminated from our ongoing operations as a result of the disposal transaction and (b) we will not have any significant continuing involvement in the operations of the component after the disposal transaction.
Construction Property Savings and Fire Proceeds
A Predecessor Entity was entitled to any savings in the budgeted completion cost of three of our owned off-campus construction properties that were completed in Fall 2004. Additionally, upon completion of construction at University Village at TU, which occurred during Fall 2004, our Predecessor Entities received a construction guarantee fee, which was paid from the remaining construction budget. In November 2004, our Predecessor Entities also received insurance proceeds that we received in connection with the fire that occurred at the University Village at Fresno. These payments were accounted for as equity distributions.
Results of Operations
For a discussion of pro forma results of operations for the three months ended March 31, 2005 and for the year ended December 31, 2004, see Notes (A) through (G) to our unaudited pro forma condensed consolidated and combined statements of operations included elsewhere in this prospectus.

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Comparison of the Three Months Ended March 31, 2005 and March 31, 2004
The following table presents our results of operations for the three months ended March 31, 2005 and 2004, including the amount (in thousands) and percentage change in these results between the two periods:
                                   
    Three Months Ended        
    March 31,        
             
    2005   2004   Change ($)   Change (%)
                 
Revenues:
                               
 
Owned off-campus properties
  $ 12,489     $ 7,989     $ 4,500       56.3 %
 
On-campus participating properties
    5,493       5,293       200       3.8 %
 
Third party development and management services
    1,355       2,070       (715 )     (34.5 )%
 
Resident services
    204       —        204       100.0 %
                         
Total revenues
    19,541       15,352       4,189       27.3 %
Operating Expenses:
                               
 
Owned off-campus properties
    5,136       3,459       1,677       48.5 %
 
On-campus participating properties
    1,875       1,800       75       4.2 %
 
Third party development and management services
    1,464       1,264       200       15.8 %
 
General and administrative
    1,364       453       911       201.1 %
 
Depreciation and amortization
    3,424       2,259       1,165       51.6 %
 
Ground/facility leases
    212       141       71       50.4 %
                         
Total operating expenses
    13,475       9,376       4,099       43.7 %
                         
Operating income
    6,066       5,976       90       1.5 %
Nonoperating income and (expenses):
                               
 
Interest income
    58       13       45       346.2 %
 
Interest expense
    (3,808 )     (4,281 )     473       (11.0 )%
 
Amortization of deferred financing costs
    (246 )     (144 )     (102 )     70.8 %
 
Other nonoperating income
    430       —        430       100.0 %
                         
Total nonoperating expenses
    (3,566 )     (4,412 )     846       (19.2 )%
                         
Income before income tax provision, minority interests, and discontinued operations
    2,500       1,564       936       59.8 %
Income tax provision
    (102 )     —        (102 )     (100.0 )%
Minority interests
    (87 )     21       (108 )     (514.3 )%
                         
Income from continuing operations
    2,311       1,585       726       45.8 %
Discontinued operations:
                               
 
Loss attributable to discontinued operations
    (2 )     (55 )     53       (96.4 )%
 
Gain from disposition of real estate
    5,883       —        5,883       100.0 %
                         
Total discontinued operations
    5,881       (55 )     5,936       10,792.7 %
                         
Net income
  $ 8,192     $ 1,530     $ 6,662       435.4 %
                         
Owned Off-Campus Properties Operations
Revenues from our owned off-campus properties for the three months ended March 31, 2005 compared with the same period in 2004 increased by $4.5 million primarily due to the completion of construction and opening of two properties in August 2004, the acquisition of seven properties during the first quarter of 2005 and higher first quarter occupancy at a majority of the same store properties operated during both periods, as described below. Operating expenses increased approximately $1.7 million for the three months ended March 31, 2005 compared with the same period in 2004. University Village at San Bernardino, which also opened in August of 2004, was sold in January 2005 and is therefore not reflected in operating revenues and expenses but is included in discontinued operations for the relevant periods.

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New Property Operations. In August 2004, we completed construction of and opened a 406-bed property serving California State University, Fresno and a 749-bed property serving Temple University. Additionally, we acquired seven properties containing 3,118 beds at various times during the first quarter of 2005, located in Florida (Gainesville and Tallahassee) and Denton, Texas. These new properties contributed $3.8 million of additional revenues and $1.6 million of additional operating expenses in the first quarter of 2005 as compared to the first quarter of 2004.
Same Store Property Operations (Excluding New Property Operations). We had nine properties containing 5,971 beds which were operating during both the three-month periods ended March 31, 2005 and 2004, and which had average occupancy rates during these periods of 97.9% and 88.8%, respectively. These properties produced revenues of $8.7 million and $8.0 million during the three-month periods ended March 31, 2005 and 2004, respectively. This increase of $0.7 million was the result of the improved Fall 2004 lease up and was offset by certain non-rental revenues previously reflected as property revenues by the Predecessor Entities, which are now reflected as resident services revenues in our TRS. Future revenues will be dependent on our ability to maintain our current leases in effect for the 2004/2005 academic year and our ability to obtain appropriate rental rates and desired occupancy for the 2005/2006 academic year at our various properties during our leasing period, which typically begins in January and ends in August.
At these existing properties, operating expenses remained relatively constant at $3.6 million for the three months ended March 31, 2005 compared to $3.5 million for the three months ended March 31, 2004. This slight increase was the result of increases in operating expenses such as marketing, maintenance, employee benefits, utilities and taxes. These increases were due to a combination of increases in inflation and overall higher occupancy rates. We anticipate that operating expenses in 2005 will continue to increase slightly as compared with 2004 as a result of expected increases in utility costs, property taxes and general inflation.
On-Campus Participating Properties (“OCPP”) Operations
Same Store OCPP Operations. We had four participating properties containing 4,167 beds (including the additional 210 beds at our Prairie View A&M property that opened in August 2003) which were operating during both the three-month periods ended March 31, 2005 and 2004. The Cullen Oaks Phase II property is currently under construction and is scheduled to commence operations in August 2005. Revenues from our on-campus participating properties increased to $5.5 million for the three months ended March 31, 2005 from $5.3 million for the three months ended March 31, 2004, an increase of $0.2 million. This increase was primarily due to an increase in rental rates, which was slightly offset by a decrease in average occupancy from 96.2% for the three months ended March 31, 2004 to 94.4% for the three months ended March 31, 2005. Coyote Village, formerly an on-campus participating property that commenced operations in August 2003, had its ground lease transferred to Weatherford College in April 2004; therefore, it is not reflected in operating revenues and expenses but is included in discontinued operations for the three months ended March 31, 2004.
Operating expenses for our on-campus participating properties remained relatively constant at $1.9 million for the three months ended March 31, 2005 compared to $1.8 million for the three months ended March 31, 2004. We anticipate that operating expenses during 2005 will increase slightly as compared with 2004 as a result of expected increases in utility costs and general inflation.
Ground/facility lease expense remained relatively constant at $0.2 million for the three months ended March 31, 2005 as compared to $0.1 million for the three months ended March 31, 2004.
Third Party Development and Management Services
Third party development and management services revenue decreased $0.7 million from $2.1 million for the three months ended March 31, 2004 to $1.4 million in 2005, primarily due to the factors discussed in the paragraphs below. Third party development and management services operating expenses increased $0.2 million for the three months ended March 31, 2005 compared with the same period in 2004,

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primarily due to expenses incurred in 2005 in relation to the pre-development and design services provided under the West Virginia University project.
Development Services. Third party development services revenue for the three months ended March 31, 2005 decreased $1.1 million compared with the same period in 2004. This decrease was primarily due to the UCI Phase I development project being completed in Fall 2004 and therefore earning no revenue during the three months ended March 31, 2005 as compared to earning approximately $0.8 million of revenue during the three months ended March 31, 2004. We also recognized $0.2 million in construction savings on a previously completed third party development project during the three months ended March 31, 2004. In addition, this decrease was due to a combination of fewer projects, a lower average project development cost and corresponding contractual fee per project and the percentage of the contractual fee recognized during the respective periods. We had four projects in progress during the three months ended March 31, 2005 with an average contractual fee of $1.2 million compared to the five projects in progress with an average contractual fee of $1.4 million for the three months ended March 31, 2004. In addition, due to the differences in the percentage of construction completed during the periods, of the total contractual fees of the projects in progress during the respective periods, 12.3% was recognized (on a percentage of completion basis) during the three months ended March 31, 2005 compared with 20.4% for the same period in 2004. Development services revenues are dependent on our ability to successfully be awarded such projects, the amount of the contractual fee related to the project and the timing and completion of the construction of the project. In addition, to the extent projects are completed under budget, we may be entitled to a portion of such savings, which are recognized as revenue upon third party verification of the project costs. It is possible that projects for which we have expended pre-development costs will not close and that we will not be reimbursed for such costs. The pre-development costs associated therewith will ordinarily be charged against income for the then-current period.
Management Services. Third party management revenues increased $0.3 million for the three months ended March 31, 2005 compared with the same period in 2004. The increase was due to five new contracts that commenced in Fall 2004. We expect third party property management revenues to continue to increase during 2005 as compared with 2004, primarily as a result of a full year of fees on the new contracts that commenced in Fall 2004.
Resident Services
Concurrent with our commencement of operations and our designation as a REIT, certain services previously provided to residents by our Predecessor Entities are now provided by our TRS. These services generally consist of food service and housekeeping (at Callaway House), and certain resident programming activities. These services are provided to the residents at market rates and, under an agreement between our TRS and our Operating Partnership, payments from residents at the properties are collected on behalf of our TRS in conjunction with their collection of rents. Revenue from resident services for the three months ended March 31, 2005 approximated $0.2 million. As a business strategy, our level of services provided to residents by the TRS is only incidental to that which is necessary to maintain or increase occupancy. As a result of the timing of the formation of the TRS in 2004, we expect revenue from resident services in 2005 to be significantly higher than in 2004.
General and Administrative
General and administrative expenses (relating primarily to corporate operations) increased $0.9 million for the three months ended March 31, 2005 compared with the same period in 2004. The increase was primarily a result of expenses incurred as a public company which were not present in the Predecessor Entities’ operations such as directors’ compensation, investor relations, increased professional services fees, Sarbanes-Oxley Section 404 compliance costs and director and officer liability insurance. As a result of being a public company and a separation agreement entered into with an executive officer in April 2005, we anticipate our future general and administrative expenses will exceed those of our Predecessor Entities.

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Depreciation and Amortization
Depreciation and amortization increased $1.2 million for the three months ended March 31, 2005 compared with the same period in 2004 primarily due to the opening of the two owned off-campus properties in August 2004 and the acquisition of seven properties for $120.2 million during the first quarter of 2005, as described above. In conjunction with the acquisition of the seven properties, a valuation was assigned to in-place leases which are amortized over the average remaining lease terms of the acquired leases (generally less than one year). This contributed $0.2 million of additional depreciation and amortization expense for the three months ended March 31, 2005. We expect depreciation and amortization in 2005 to increase significantly from 2004 primarily due to a full year’s depreciation on the two owned off-campus properties that opened in August 2004 and the acquisition of seven properties during the first quarter of 2005.
Amortization of deferred financing costs increased $0.1 million for the three months ended March 31, 2005 compared with the same period in 2004 primarily due to debt assumed or incurred in connection with the property acquisitions closed during the first quarter of 2005 as well as additional finance costs incurred in 2004 related to our revolving credit facility obtained in connection with the IPO. These increases were offset by a decrease in amortization related to two mortgage loans that were paid off in connection with our IPO.
Interest Expense
Interest expense for the three months ended March 31, 2005 decreased $0.5 million compared to the same period in 2004 primarily due to the retirement of two mortgage loans in connection with the IPO. This was partially offset by $0.5 million of additional interest expense from the debt assumed or incurred in relation to the acquisition of the seven properties in the first quarter 2005, as well as increased interest expense in 2005 related to our revolving credit facility. We anticipate that interest expense in 2005 will increase from 2004 levels due to the debt assumed or incurred in connection with our 2005 property acquisitions and to increases in borrowing rates that may impact the floating rate on our revolving credit facility.
Other Income
Other income increased $0.4 million for the three months ended March 31, 2005 compared with the same period in 2004 due to a gain recognized related to a property insurance settlement.
Income Tax
Subsequent to our IPO formation transactions, our TRS manages our non-REIT activities. The TRS is subject to federal, state and local income taxes and is required to recognize the future tax benefits attributable to deductible temporary differences between book and tax basis, to the extent that the asset will be realized. For the three months ended March 31, 2005, the TRS recorded $0.1 million of income tax expense.
Unlike our Predecessor Entities, we are subject to federal, state and local income taxes as a result of the services provided by our TRS, which include our third party services revenues, resident services revenues and the operations of our on-campus participating properties. As a result, the income earned by our TRS, unlike our Predecessor Entities and our results from our owned off-campus properties, is subject to a new level of taxation. The amount of income taxes to be recognized in the future will be dependent on the operating results of the TRS.
Minority Interests
Minority interests during the three months ended March 31, 2004 represented a minority partner’s share of the net loss of four owned off-campus properties. We redeemed this minority partner’s interest in connection with our IPO. Minority interests for the three months ended March 31, 2005 represented the

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1.0% interest in the net equity of our Operating Partnership held by recipients of PIUs. See “Management— Executive Officer Compensation— Profits Interest Units” for a description of PIUs.
Discontinued Operations
Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, requires, among other items, that the operating results of real estate properties sold or classified as held for sale be included in discontinued operations in the statements of operations for all periods presented. Discontinued operations for the three months ended March 31, 2005 includes The Village at San Bernardino, which was sold to Cal State University— San Bernardino in January 2005. The properties included in discontinued operations for the three months ended March 31, 2004 include the Village at Riverside and other non-core assets that were distributed to our Predecessor Entities as part of the IPO as well as an on-campus participating property whose ground lease was transferred to the Weatherford College in April 2004.
Comparison of the Years Ended December 31, 2004 and December 31, 2003
The results for the year ended December 31, 2004 presented below represent the combined financial results of our Predecessor Entities for the period from January 1, 2004 to August 16, 2004, and our consolidated financial results for the period from August 17, 2004 to December 31, 2004. The presentation of results for the year ended December 31, 2004 below is not in accordance with GAAP and is presented only for comparison purposes. The following table presents our results of operations for the years ended

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December 31, 2004 and 2003, including the amount (in thousands) and percentage change in these results between the two periods:
                                     
    Year Ended December 31,        
             
    2004   2003   Change ($)   Change (%)
                 
Revenues:
                               
 
Owned off-campus properties
  $ 35,115     $ 31,514     $ 3,601       11.4 %
 
On-campus participating properties
    17,418       16,482       936       5.7 %
 
Third party development and management services
    7,908       9,128       (1,220 )     (13.4 )%
 
Resident services
    382       12       370       3,083.3 %
                         
Total revenues
    60,823       57,136       3,687       6.5 %
Operating Expenses:
                               
 
Owned off-campus properties
    16,861       15,272       1,589       10.4 %
 
On-campus participating properties
    7,900       7,925       (25 )     (0.3 )%
 
Third party development and management services
    5,543       5,389       154       2.9 %
 
General and administrative
    5,234       2,749       2,485       90.4 %
 
Depreciation and amortization
    9,973       8,868       1,105       12.5 %
 
Ground/facility leases
    812       489       323       66.1 %
                         
Total operating expenses
    46,323       40,692       5,631       13.8 %
                         
Operating income
    14,500       16,444       (1,944 )     (11.8 )%
Nonoperating income and (expenses):
                               
 
Interest income
    82       71       11       15.5 %
 
Interest expense
    (16,698 )     (16,940 )     242       (1.4 )%
 
Amortization of deferred financing costs
    (1,211 )     (558 )     (653 )     117.0 %
 
Other nonoperating income
    927       —        927       100.0 %
                         
Total nonoperating expenses
    (16,900 )     (17,427 )     527       (3.0 )%
                         
Loss before income tax benefit, minority interests, and discontinued operations
    (2,400 )     (983 )     (1,417 )     144.2 %
Income tax benefit
    728       —        728       100.0 %
Minority interests
    100       16       84       525.0 %
                         
Loss from continuing operations
    (1,572 )     (967 )     (605 )     62.6 %
Discontinued operations:
                               
 
Income attributable to discontinued operations
    272       7       265       3,785.7 %
 
(Loss) gain from disposition of real estate
    (39 )     16       (55 )     (343.8 )%
                         
Total discontinued operations
    233       23       210       913.0 %
                         
   
Net loss
  $ (1,339 )   $ (944 )   $ (395 )     41.8 %
                         
Owned Off-Campus Properties Operations
Revenues from our owned off-campus properties increased by $3.6 million in 2004 as compared to 2003 primarily due to the completion of construction and opening of two properties in August 2004 and higher fourth quarter occupancy at a majority of the same store properties operated during both years, as described below. Operating expenses increased $1.6 million in 2004 as compared to 2003 primarily due to the new property operations described below. University Village at San Bernardino, which also opened in August of 2004, was sold in January 2005 and is therefore not reflected in operating revenues and expenses but is included in discontinued operations for the relevant periods.
New Property Operations. In August of 2004 we completed construction of and opened a 406-bed property serving California State University, Fresno and a 749-bed property serving Temple University. These new properties contributed $3.2 million of additional revenues and $1.3 million of additional operating expenses during 2004 as compared with 2003.

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Same Store Property Operations (Excluding New Property Operations). We had nine properties containing 5,971 beds which were operating during both 2004 and 2003, and which had weighted average occupancy rates during these periods of 89.7% and 86.9%, respectively. These properties produced revenues of $31.9 million and $31.5 million during 2004 and 2003, respectively. This increase of approximately $0.4 million or 1.3% was the result of the improved Fall 2004 lease up and was offset by certain non-rental revenues previously reflected as property revenues by the Predecessor Entities, which are now reflected as resident services revenues in our TRS. Revenues in 2005 will be dependent on our ability to maintain our current leases in effect for the 2004/2005 academic year and our ability to obtain appropriate rental rates and desired occupancy for the 2005/2006 academic year at our various properties during our leasing period, which typically begins in January and ends in August.
At these existing properties, operating expenses increased $0.3 million or 2.0% in 2004 compared with 2003. This increase was the result of increases in operating expenses such as bad debt, maintenance, employee benefits, and taxes. These increases were due to a combination of increases in inflation, overall higher occupancy rates and decreased collection prospects at certain properties. We anticipate that operating expenses in 2005 will increase slightly as compared with 2004 as a result of expected increases in utility costs, property taxes and general inflation.
OCPP Operations
Revenues from our on-campus participating properties increased $0.9 million in 2004 compared to 2003 primarily due to the opening of 210 additional beds at the University College-Prairie View A&M University property in August 2003, and an increase in both average occupancy and rental rates for properties which were operating during both 2004 and 2003. Operating expenses for our on-campus participating properties remained relatively constant in 2004 as compared to 2003. Coyote Village, an on-campus participating property that commenced operations in August 2003, had its ground lease transferred to Weatherford College in April 2004; therefore, it is not reflected in operating revenues and expenses but is included in discontinued operations for the relevant periods.
New Property Operations. As discussed above, in August 2003 we opened a 210-bed phase of University College-Prairie View A&M University. The opening of this on-campus property contributed $0.8 million and $0.4 million of revenues for 2004 and 2003, respectively, an increase of $0.4 million. This property also contributed a $0.3 million increase in operating expenses from $0.1 million in 2003 to $0.4 million in 2004.
Same Store OCPP Operations (Excluding New Property Operations). We had four properties containing 3,957 beds which were operating during both 2004 and 2003, and which had average occupancy rates during these periods of 82.9% and 78.9% respectively. These properties produced revenues of $16.6 million and $16.1 million during 2004 and 2003, respectively.
Operating expenses for our same store OCPPs decreased to $7.5 million in 2004 from $7.8 million in 2003, a decrease of $0.3 million. This decrease is primarily due to reduced utility rates and improved collection prospects. We anticipate that operating expenses in 2005 will increase slightly as compared with 2004 as a result of expected increases in utility costs and general inflation.
Ground/facility lease expense increased by $0.3 million in 2004 compared with 2003. Ground/facility lease payments reflect the Universities’ 50% share of the related facilities’ cash flows, which have increased in 2004 as compared to 2003. The increased cash flows primarily relate to improvements in operations resulting from increased occupancy and rates as well as reductions in turn costs and bad debt expense.
Third Party Development and Management Services
Third party development and management services revenue decreased $1.2 million from $9.1 million in 2003 to $7.9 million in 2004.
Development Services. Third party development services revenue for 2004 decreased $2.1 million compared to 2003. This decrease was due to a combination of a lower average contractual fee per project and the percentage of the contractual fee recognized during the respective periods. We had 13 projects in

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progress during 2004 with an average contractual fee of $1.0 million, as compared to 2003 in which we had ten projects in progress with an average contractual fee of $1.2 million. In addition, due to differences in the percentage of construction completed during the periods, of the total contractual fees of the projects in progress during the respective periods, 36.0% was recognized (on a percentage of completion basis) during 2004 compared to 60.4% in 2003. Development services revenues are dependent on our ability to successfully be awarded such projects, the amount of the contractual fee related to the project and the timing and completion of the construction of the project. It is possible that projects for which we have expended pre-development costs will not close and that we will not be reimbursed for such costs. The pre-development costs associated therewith will ordinarily be charged against income for the then-current period. Any such charge could have a material effect on our results of operations in the period in which the charge is taken.
Third party development services revenue from on-campus participating properties increased primarily due to the recognition of $0.4 million of deferred development fees on an on-campus participating property that was transferred to Weatherford College in April 2004.
We continue to see a very active market for third party development and construction management services with active request for proposals, or RFP, process consistent with prior years. The market has begun to expand, with colleges and universities seeking new levels of service ranging from long-range planning, predevelopment consulting, and campus planning, to the more traditional historic full development and construction management services. We pursue these projects based on relative profitability, long-term relationship opportunities and geographical asset growth synergies.
Management Services. Third party management revenues increased by $0.9 million in 2004 compared with 2003. The increase was due to five new contracts that commenced in Fall 2004 as well as a full year of fees from contracts that began in Fall 2003. We expect third party property management revenues to increase in 2005 from 2004, primarily as a result of the timing of the new contracts that commenced in Fall 2004.
Resident Services
Concurrent with our commencement of operations and our designation as a REIT, certain services previously provided to residents by our Predecessor Entities are now provided by our TRS. These services generally consist of food service and housekeeping (at Callaway House), and certain resident programming activities. These services are provided to the residents at market rates and, under an agreement between our TRS and our Operating Partnership, payments from residents at the properties are collected on behalf of our TRS in conjunction with their collection of rents. Revenue from resident services for the year ended December 31, 2004 approximated $0.4 million. As a business strategy, our level of services provided to residents by the TRS is only incidental to that which is necessary to maintain or increase occupancy. As a result of the timing of the formation of the TRS in 2004, we expect revenue from resident services in 2005 to be significantly higher than in 2004.
General and Administrative
General and administrative expenses (consisting primarily of corporate expenses) of $5.2 million for 2004 included $2.2 million of expenses related to the IPO and formation transactions. Excluding these expenses, general and administrative expenses increased $0.3 million in 2004 compared to 2003. The IPO and formation transactions consisted of the recognition of compensation expense of $2.1 million and $0.1 million in connection with the issuance of PIUs and restricted stock units, respectively. The remaining increase was primarily a result of expenses incurred as a public company which were not present in the Predecessor Entities’ operations such as directors’ compensation, investor relations and director and officer liability insurance. As a result of being a public company, we anticipate our future general and administrative expenses will exceed those of our Predecessor Entities.

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Depreciation and Amortization
Depreciation and amortization increased $1.1 million in 2004 compared to 2003. The increase was primarily due to $0.8 million of additional depreciation and amortization from the opening of the two owned off-campus properties in August 2004 and the opening of the on-campus participating property in August 2003, as described above. We expect depreciation and amortization in 2005 to increase significantly from 2004 primarily due to a full year’s depreciation on the two owned off-campus properties opened in August 2004 and the $120.2 million of announced 2005 acquisitions already closed or pending closure. Amortization of deferred financing costs increased $0.7 million in 2004 compared to 2003 primarily due to the write-off of $0.6 million of unamortized deferred financing costs associated with the repayment of debt in connection with the IPO.
Interest Expense
Interest expense of $16.7 million for 2004 represented a decrease of $0.2 million from $16.9 million in 2003. Interest expense decreased due to the retirement of certain debt in connection with the IPO, which was partially offset by loan prepayment penalties incurred in connection with such debt repayment and an increase in interest expense recognized on the opening of the on-campus participating property in August 2003. We anticipate that interest expense in 2005 will increase from 2004 levels due to interest expense on debt assumed or incurred in connection with potential property acquisitions and to increases in borrowing rates that may impact our floating rate on our revolving credit facility, which would be slightly offset by a reduction in interest expense due to the repayment of $46.0 million in mortgage loans in connection with the IPO.
Other Income
Other income increased $0.9 million in 2004 as compared with 2003 primarily due to gains related to two property insurance settlements.
Discontinued Operations
Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” requires, among other items, that the operating results of real estate properties sold or classified as held for sale be included in discontinued operations in the statements of operations for all periods presented. The properties included in discontinued operations for the years ended December 31, 2004 and/or December 31, 2003 include (i) the Village at Riverside and other non-core assets that were distributed to our Predecessor Entities as part of the IPO, (ii) an on-campus participating property whose ground lease was transferred to the Weatherford College in April 2004, and (iii) University Village at San Bernardino, which was sold to California State University— San Bernardino in January 2005 and is classified as Owned Off-Campus Property— Held for Sale as of December 31, 2004.
Please refer to Note 15 in the accompanying notes to consolidated and combined financial statements contained elsewhere in this prospectus summarizing the results of operations of the properties sold, distributed, or classified as held for sale during the years ended December 31, 2004 and 2003.

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Comparison of Years Ended December 31, 2003 and December 31, 2002
The following table presents our results of operations for the years ended December 31, 2003 and 2002, including the amount (in thousands) and percentage change in these results between the two periods:
                                     
    Year Ended December 31,        
             
    2003   2002   Change ($)   Change (%)
                 
Revenues:
                               
 
Owned off-campus properties
  $ 31,514     $ 29,997     $ 1,517       5.1 %
 
On-campus participating properties
    16,482       16,055       427       2.7 %
 
Third party development and management services
    9,128       6,019       3,109       51.7 %
 
Resident services
    12       60       (48 )     (80.0 )%
                         
Total revenues
    57,136       52,131       5,005       9.6 %
                         
Operating Expenses:
                               
 
Owned off-campus properties
    15,272       14,856       416       2.8 %
 
On-campus participating properties
    7,925       8,101       (176 )     (2.2 )%
 
Third party development and management services
    5,389       4,441       948       21.3 %
 
General and administrative
    2,749       1,995       754       37.8 %
 
Depreciation and amortization
    8,868       8,077       791       9.8 %
 
Ground/facility leases
    489       643       (154 )     (24.0 )%
                         
Total operating expenses
    40,692       38,113       2,579       6.8 %
                         
Operating income
    16,444       14,018       2,426       17.3 %
Nonoperating income and (expenses):
                               
 
Interest income
    71       166       (95 )     (57.2 )%
 
Interest expense
    (16,940 )     (16,421 )     (519 )     3.2 %
 
Amortization of deferred financing costs
    (558 )     (546 )     (12 )     2.2 %
                         
Total nonoperating expenses
    (17,427 )     (16,801 )     (626 )     3.7 %
                         
Loss before minority interests and discontinued operations
    (983 )     (2,783 )     1,800       (64.7 )%
Minority interests
    16       30       (14 )     (46.7 )%
                         
Loss from continuing operations
    (967 )     (2,753 )     1,786       (64.9 )%
Discontinued operations:
                               
 
Income attributable to discontinued operations
    7       319       (312 )     (97.8 )%
 
Gain from disposition of real estate
    16       295       (279 )     (94.6 )%
                         
Total discontinued operations
    23       614       (591 )     (96.3 )%
                         
   
Net loss
  $ (944 )   $ (2,139 )   $ 1,195       (55.9 )%
                         
Owned Off-Campus Properties Operations
Revenues from our owned off-campus properties increased in 2003 by $1.5 million as compared to 2002, primarily from a full year of operations at a property we developed and opened in 2002, as discussed below.
New Property Operations. In August 2002, we completed construction of a 309-bed property (University Village at Boulder Creek) and opened the property at 100% occupancy for the 2002/2003 academic year. This property contributed revenues of $2.6 million and operating expenses of $0.8 million in 2003, its first full calendar year of operations, an increase of approximately $1.6 million and $0.5 million, respectively, from its partial first year of operation in 2002.
Same Store Property Operations (Excluding New Property Operations). We had eight properties containing 5,662 beds in 2003 and 2002 which produced revenues of $28.9 million and $29.0 million in those years, respectively. Our weighted average occupancy of 86.4% for 2003 decreased slightly from 86.7%

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in 2002. The decrease in both revenue and occupancy from 2002 to 2003 was primarily due to a softening of the overall multifamily submarket primarily impacting two properties.
At these existing properties, operating expenses remained relatively constant and decreased by $0.1 million in 2003 as compared to 2002.
OCPP Operations
Revenues from our on-campus participating properties increased $0.4 million in 2003 compared to 2002 primarily due to the opening of 210 additional beds at the University College— PVAMU property in August 2003, as discussed below. Coyote Village, formerly an on-campus participating property that commenced operations in August 2003, had its ground leases transferred to Weatherford College in April 2004; therefore, it is not reflected in operating revenues and expenses but is included in discontinued operations. In addition, Lamar, an on-campus participating property that commenced operations in August 2002, had its ground lease transferred to Lamar University in December 2002; therefore, it is not reflected in operating revenues and expenses but is included in discontinued operations for the year ended December 31, 2003.
New Property Operations. In August 2003 we opened a 210-bed phase of University College-Prairie View A&M University. The opening of this on-campus property contributed $0.4 million of revenue and $0.1 million of operating expenses in 2003.
Same Store OCPP Operations (Excluding New Property Operations). We had four properties containing 3,957 beds which were operating during both 2003 and 2002, and which had average occupancy rates during these periods of 78.9% and 78.7%, respectively. These properties produced revenues of $16.1 million in both 2003 and 2002.
Operating expenses for our same store OCPP properties were $7.8 million and $8.1 million in 2003 and 2002, respectively, a decrease of $0.3 million. This decline was the result of a reduction in insurance premiums and reductions in expenses related to corporate management and oversight.
Ground/facility lease expense decreased by $0.2 million in 2003 compared with 2002. Ground/facility lease payments reflect the Universities’ 50% share of the related facilities’ cash flows, which decreased in 2003 as compared to 2002.
Third Party Development and Management Services
Third party development and management services revenues increased from $6.0 million in 2002 to $9.1 million in 2003, an increase of $3.1 million.
Development Services. Third party development services revenues of $7.9 million in 2003 represented an increase of $2.8 million from $5.1 million in 2002. This increase resulted primarily from an increase in the number of development projects in progress (twelve in 2003 compared to nine in 2002, a 33% increase). Incentive fees based on cost savings were $0.2 million for 2002 and 2003.
Management Services. Third party property management revenues of $1.2 million in 2003 represented an increase of $0.2 million from $1.0 million in 2002. The increase consisted of $0.2 million from a full year of fees from contracts beginning in 2002 and an increase of $0.2 million from five contracts that commenced in Fall 2003, offset, in part, by the final amortization in 2002 of a deferred cancellation fee in the amount of $0.2 million.
The increase in the volume of our third party service business required us to correspondingly increase the resources and related costs dedicated to the pursuit and delivery of third party services. Consequently, our compensation and benefits, insurance and pursuit costs increased by $1.0 million from $4.4 million in 2002 to $5.4 million in 2003. In part, these increased expenses reflect our increased staffing needs in this area.

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General and Administrative
General and administrative expenses (consisting primarily of corporate expenses) of $2.8 million in 2003 represented an increase of $0.8 million from $2.0 million in 2002. The increase was primarily a result of a severance accrual for our Predecessor Entities’ former chief executive officer.
Depreciation and Amortization
Depreciation and amortization of $8.9 million for 2003 represented an increase of $0.8 million due to a full year’s depreciation of one owned off-campus property placed in service during 2002 and depreciation of an on-campus participating property placed in service in August 2003. Amortization of deferred financing costs remained relatively constant at $0.6 million for both 2003 and 2002.
Interest Expense
Interest expense of $16.9 million in 2003 represented an increase of $0.5 million from $16.4 million in 2002. The increase consisted primarily of a full year’s interest expense in 2003 relating to a developed property that opened in Fall 2002 and a partial year’s interest expense on a developed on-campus participating property that opened in Fall 2003, partially offset by a decrease in interest expense resulting from principal payments.
Discontinued Operations
SFAS No. 144 requires, among other items, that the operating results of real estate properties sold or classified as held for sale be included in discontinued operations in the statements of operations for all periods presented. The properties included in discontinued operations for the years ended December 31, 2003 and/or December 31, 2002 include (i) the Village at Riverside and other non-core assets that were distributed to our Predecessor Entities owners as part of the IPO, (ii) an on-campus participating property whose ground lease was transferred to the Weatherford College in April 2004, and (iii) an on-campus participating property whose ground lease was transferred to Lamar University in December 2002.
Please refer to Note 15 to the accompanying notes to consolidated and combined financial statements included elsewhere in this prospectus for a table summarizing the results of operations of the properties sold, distributed, or classified as held for sale during the years ended December 31, 2003 and 2002.
Cash Flows
Comparison of the Three Months Ended March 31, 2005 and March 31, 2004
Operating Activities
For the three months ended March 31, 2005, net cash provided by operating activities before changes in working capital accounts provided approximately $6.1 million, as compared to $4.0 million for the three months ended March 31, 2004, an increase of $2.1 million. This increase was primarily due to an increase in net income of approximately $6.7 million, resulting primarily from a gain on disposition of approximately $5.9 million. Additionally, operations for the three months ended March 31, 2005 were impacted by a $1.1 million increase in depreciation and amortization resulting from the seven new properties that we acquired during the first quarter of 2005 as well as a full quarter of depreciation from two owned off-campus properties that completed construction in the third quarter 2004.
Changes in working capital accounts utilized approximately $0.4 million for the three months ended March 31, 2005 while approximately $1.2 million was provided by working capital for the three months ended March 31, 2004, a decrease of $1.6 million. This change was primarily due to an increase in accrued expenses during the three months ended March 31, 2004 related to our IPO and a decrease in restricted cash during the same period that was used to fund the rebuild of an off-campus property that was destroyed by a fire in 2003. These items were offset by the release of restricted cash to our

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Predecessor Entities in the first quarter 2005 in relation to the completion of three owned off-campus properties in the third quarter 2004.
Investing Activities
Investing activities utilized $58.9 million and $19.2 million for the three months ended March 31, 2005 and 2004, respectively. The increase in 2005 related primarily to the acquisition of the seven properties in the first quarter of 2005. This increase was offset by proceeds received from the sale of University Village at San Bernardino in January 2005 as well as a decrease in cash used to fund three owned off-campus development properties that were completed in the third quarter 2004. For the three months ended March 31, 2005 and 2004, our cash used in investing activities was comprised of the following (in thousands):
                   
    Three Months Ended
    March 31,
     
    2005   2004
         
Property acquisitions
  $ (72,763 )   $ —   
Property dispositions
    28,023       —   
Capital expenditures for on-campus participating properties
    (28 )     (124 )
Capital expenditures for owned off-campus properties
    (852 )     (168 )
Investments in on-campus participating properties under development
    (3,027 )     —   
Investment in owned off-campus properties under development
    (10,120 )     (18,866 )
Purchase of corporate furniture, fixtures and equipment
    (86 )     (55 )
             
 
Total
  $ (58,853 )   $ (19,213 )
             
Financing Activities
Cash provided by financing activities totaled $55.5 million and $13.0 million for the three months ended March 31, 2005 and 2004, respectively. The increase was primarily due to draws under our revolving credit facility in 2005 as well as a bridge loan we obtained in connection with the March 2005 acquisition of Exchange at Gainesville (to be renamed). These increases were offset by a decrease in proceeds from construction loans due to the completion of three owned off-campus development projects in the third quarter 2004, as well as distributions paid to our stockholders in 2005 as a result of our new public ownership structure.
Comparison of Years Ended December 31, 2004 and December 31, 2003
Operating Activities
For the year ended December 31, 2004, net cash provided by operating activities before changes in working capital accounts provided approximately $11.9 million, as compared to $8.9 million for the year ended December 31, 2003, an increase of $3.0 million. Despite a $0.4 million increase in net loss from 2003 to 2004, operations for 2004 were impacted by $3.4 million of non-cash expenses which primarily consisted of compensation related to the issuance of PIUs and restricted stock units in connection with our IPO and increased depreciation and amortization primarily due to the timing of various student housing property additions.
Changes in working capital accounts provided approximately $5.4 million for the year ended December 31, 2004 while $2.0 million was utilized by working capital for the year ended December 31, 2003, an increase of $7.4 million. This change was primarily the result of a receivable for insurance proceeds in 2003 related to a fire that occurred at one of our owned off-campus properties under development in Fresno, California the subsequent receipt and use of those proceeds in 2004 to fund the related rebuild costs, as well as higher payables associated with three development projects under construction as of December 31, 2003.

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Additionally, in connection with the pay down of three construction loans as part of our IPO formation transactions, certain restricted funds were released by the lender in the third quarter 2004.
Investing Activities
Investing activities used $63.6 million and $33.7 million for the years ended December 31, 2004 and 2003, respectively. The increase in the cash used in investing activities during the year ended December 31, 2004 related primarily to the use of cash to fund the development costs at University Village at Fresno, University Village at San Bernardino and University Village at TU owned off-campus construction projects, which were completed in Fall 2004. Additionally, in 2004, we purchased land and funded development costs for University Village at Sweet Home and commenced construction of a new on-campus facility (Cullen Oaks— Phase II), both of which are scheduled to be completed in August 2005. For the years ended December 31, 2004 and 2003, our cash used in investing activities was comprised of the following (in thousands):
                   
    Year Ended December 31,
     
    2004   2003
         
Property dispositions/ transfers to University
  $ —      $ (7,976 )
Capital expenditures for on-campus participating properties
    (1,045 )     (406 )
Capital expenditures for owned off-campus properties
    (7,674 )     (3,775 )
Investments in on-campus participating properties under development
    (836 )     (3,382 )
Investments in owned off-campus properties under development
    (53,446 )     (18,002 )
Purchase of corporate furniture, fixtures, and equipment
    (620 )     (197 )
             
 
Total
  $ (63,621 )   $ (33,738 )
             
Financing Activities
Cash provided by financing activities totaled $45.2 million and $21.5 million for the years ended December 31, 2004 and 2003, respectively. In connection with our IPO and our subsequent issuance of additional shares under the exercise of the underwriters’ over-allotment option, we generated gross proceeds of approximately $220.8 million. Approximately $23.0 million of the gross proceeds were used for the underwriters’ discount, offering costs and financing costs, leaving us with net proceeds of approximately $197.8 million. Approximately $85.9 million of our gross proceeds were used to purchase the equity interests of our Predecessor Entities. In addition, during 2004, we borrowed approximately $41.2 million to fund the three development projects described above. In connection with our IPO, we paid off the then-outstanding loan balance (including approximately $18.3 million of outstanding loan draws from 2003) using approximately $59.5 million from our IPO proceeds. We also used our IPO proceeds to pay off $46.0 million of mortgage debt and the $1.7 million balance on our Predecessor Entities’ line of credit. In connection with the IPO, we also entered into a $75 million revolving credit facility, of which $11.8 million was outstanding at December 31, 2004. Also, a $2.1 million partial-quarter distribution for the third quarter 2004 was paid in November 2004.
Comparison of Years Ended December 31, 2003 and December 31, 2002
Operating Activities
Net cash provided by operating activities before changes in working capital accounts totaled $8.9 million and $6.8 million for 2003 and 2002, respectively, an increase of $2.1 million. This increase resulted from a corresponding decrease in net loss of $1.2 million and an increase in depreciation and amortization of $0.8 million. Changes in working capital accounts used $2.0 million in 2003 while $0.8 million was provided by changes in working capital accounts in 2002, a decrease of $2.8 million. The change is primarily due to an increase in restricted cash in 2003 related to the receipt of insurance proceeds from a

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fire that occurred at one of our owned off-campus properties under development in Fresno, California, as well as certain restricted funds that were set aside as required under construction loan agreements.
Investing Activities
Net cash used in investing activities totaled $33.7 million and $21.7 million for 2003 and 2002, respectively, an increase of $12.0 million. The increase related to the construction of two on-campus participating properties that opened in 2003 and three owned off-campus owned properties under construction during 2003 that opened in Fall 2004. For the years ended December 31, 2003 and 2002, our cash used in investing activities was comprised of the following (in thousands):
                   
    Year Ended December 31,
     
    2003   2002
         
Property dispositions/ transfers to University
  $ (7,976 )   $ —   
Capital expenditures for on-campus participating properties
    (406 )     (396 )
Capital expenditures for owned off-campus properties
    (3,775 )     (2,024 )
Investments in on-campus participating properties under development
    (3,382 )     —   
Investments in owned off-campus properties under development
    (18,002 )     (18,877 )
Purchase of corporate furniture, fixtures, and equipment
    (197 )     (381 )
             
 
Total
  $ (33,738 )   $ (21,678 )
             
Financing Activities
Net cash provided by financing activities totaled $21.5 million and $11.6 million for 2003 and 2002, respectively, an increase of $9.9 million. This increase was due primarily to borrowings and contributions to fund the construction of two on-campus participating properties and three owned off-campus owned properties under construction during 2003, offset by an increase in distributions to our Predecessor Entities of $2.1 million.
Liquidity and Capital Resources
Cash Balances and Liquidity
As of March 31, 2005, excluding our on-campus participating properties, we had $6.7 million in cash and cash equivalents, restricted cash and short-term investments, as compared to $7.0 million and $7.8 million in cash and cash equivalents, restricted cash and short-term investments as of December 31, 2004 and 2003, respectively. Restricted cash primarily consists of escrow accounts held by lenders and resident security deposits, as required by law in certain states. Additionally, restricted cash as of December 31, 2004 also included $0.8 million of funds held in escrow that were paid to the owners of our Predecessor Entities in February 2005 in accordance with the terms of the Contribution Agreement executed in conjunction with the IPO.
As of March 31, 2005, our short-term liquidity needs included, but were not limited to, the following: (i) anticipated distribution payments to our stockholders and unitholders for 2005 totaling approximately $17.2 million based on an anticipated annual distribution of $1.35 per share or unit, including those required to qualify as a REIT and satisfy our current distribution policy, (ii) remaining development costs on our University Village at Sweet Home development project, estimated to be approximately $14.8 million, and (iii) funds for other potential future development projects. We expect to meet our short-term liquidity requirements generally through net cash provided by operations, borrowings under our revolving credit facility and permanent property level debt.
We may seek additional funds to undertake initiatives not contemplated by our business plan or obtain additional cushion against possible shortfalls. We also may pursue additional financing as opportunities arise. Future financings may include a range of different sizes or types of financing, including the sale of

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additional debt or equity securities. While we believe we will be able to obtain such funds, these funds may not be available on favorable terms or at all. Our ability to obtain additional financing depends on several factors, including future market conditions, our success or lack of success in penetrating our markets, our future creditworthiness and restrictions contained in agreements with our investors or lenders, including the restrictions contained in the agreements governing our revolving credit facility. These financings could increase our level of indebtedness or result in dilution to our equity holders.
Revolving Credit Facility
Our Operating Partnership has a senior revolving credit facility with a term of 36 months that provides a maximum capacity of $100 million, subject to certain conditions as contained in the credit agreement. The maximum capacity may be increased by up to an additional $100 million, subject to certain borrowing base requirements, as outlined in the credit agreement. The facility bears interest at a variable rate, at our option, based upon a base rate or one-, two-, three-, or six-month LIBOR plus, in each case, a spread based upon our total leverage. Additionally, we are required to pay an unused commitment fee ranging from 0.20% to 0.25% per annum, depending on the aggregate unused balance. We guarantee the Operating Partnership’s obligations under the credit facility. As of March 31, 2005, the balance outstanding on the revolving credit facility totaled $33.6 million, bearing interest at a weighted average rate of 4.31% per annum, with remaining availability on our then existing revolving credit facility totaling $31.5 million, subject to certain financial covenants. As of June 17, 2005, the balance outstanding on the revolving credit facility totaled $50.2 million. We subsequently amended our revolving credit facility.
The terms of the credit facility include certain restrictions and covenants that limit, among other things, the payment of distributions, the incurrence of additional indebtedness, liens and the disposition of assets. The terms also require compliance with financial ratios relating to consolidated net worth and leverage requirements. We are also subject to compliance with additional fixed charge and debt coverage ratios. As of March 31, 2005, we were in compliance with all such covenants. Before June 30, 2006, we may not pay distributions that exceed 100% of our funds from operations for any four consecutive quarters. After June 30, 2006, we may not pay distributions that exceed 95% of our funds from operations for any four consecutive quarters.
Distributions
We are required to distribute 90% of our REIT taxable income (excluding capital gains) on an annual basis in order to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to common stockholders and PIU holders. All such distributions are at the discretion of our board of directors. We may be required to use borrowings under the credit facility, if necessary and to the extent permitted thereunder, to meet REIT distribution requirements and qualify as a REIT. The board of directors considers market factors and our performance in addition to REIT requirements in determining distribution levels.
On May 11, 2005, we declared a distribution per share of common stock of $0.3375, which was paid on May 31, 2005 to all common stockholders of record as of May 19, 2005. At the same time, we paid an equivalent amount per unit to holders of PIUs and restricted stock awards.
Distributions to Owners of the Predecessor Entities
An entity newly formed by the owners of our Predecessor Entities was entitled to any savings in the budgeted completion cost of three of our owned off-campus construction properties that were completed in Fall 2004. Accordingly, in February 2005, we distributed approximately $0.4 million of designated unspent funds to an entity affiliated with the owners of our Predecessor Entities and accounted for the payment as an equity distribution. The $0.8 million in escrowed funds described above were also released to an entity affiliated with the owners of our Predecessor Entities. We do not have any ownership interest in either such entity and neither entity has any ownership interest in us.

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Additionally, upon completion of construction at University Village at TU, which occurred Fall 2004, the owners of our Predecessor Entities received $0.5 million relating to a construction guarantee fee, which was paid from the remaining construction budget. In November 2004, the owners of our Predecessor Entities also received $0.9 million relating to insurance proceeds we received in connection with the fire that occurred at the University Village at Fresno. These payments were also accounted for as equity distributions. Subsequent to December 31, 2004, other than the completion funds described above, the only payments that the owners of our Predecessor Entities are entitled to relate to potential additional insurance proceeds received in connection with the fire at the University Village at Fresno.
Recurring Capital Expenditures
Our properties require periodic investments of capital for general capital expenditures and improvements. Our policy is to capitalize costs related to the acquisition, development, rehabilitation, construction and improvement of properties, including interest and certain internal personnel costs related to the communities under rehabilitation and construction. Capital improvements are costs that increase the value and extend the useful life of an asset. Ordinary repair and maintenance costs that do not extend the useful life of the asset are expensed as incurred. Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues and typically include: appliances, carpeting and flooring, HVAC equipment, kitchen/bath cabinets, new roofs, site improvements and various exterior building improvements. Non-recurring capital expenditures include expenditures that were taken into consideration when underwriting the purchase of a property which were considered necessary to bring the property up to “operating standard,” and incremental improvements that include, among other items, community centers, new windows and kitchen/bath apartment upgrades. Additionally, we are required by certain of our lenders to contribute amounts to reserves for capital repairs and improvements at their mortgaged properties. These annual contributions may exceed the amount of capital expenditures actually incurred in such year at such properties.
Pre-Development Expenditures
Our third party development activities have historically required us to fund pre-development expenditures such as architectural fees, permits and deposits. Because the closing of a development project’s financing is often subject to third party delay, we cannot always predict accurately the liquidity needs of these activities. We frequently incur these predevelopment expenditures before a financing commitment has been obtained and, accordingly, bear the risk of the loss of these predevelopment expenditures if financing cannot ultimately be arranged on acceptable terms. Historically, the development projects that we have been awarded have been successfully structured and financed; however, their development has at times been delayed beyond the period initially scheduled, causing revenue to be recognized in later periods.
Indebtedness
As of March 31, 2005, we had approximately $309.4 million of outstanding consolidated indebtedness (excluding unamortized debt premiums of approximately $5.0 million), comprised of a $33.6 million balance on our revolving credit facility (which, prior to the subsequent amendment of the credit facility, was secured by four of our owned off-campus properties), $196.1 million in mortgage and bridge loan indebtedness secured by 13 of our owned off-campus properties, $20.0 million in mortgage and construction loans secured by two on-campus participating properties and $59.7 million in bond issuances secured by three of our on-campus participating properties. The weighted average interest rate on our consolidated indebtedness as of March 31, 2005 was 6.6% per annum. All of our outstanding indebtedness is fixed rate except for our revolving credit facility and the Cullen Oaks Phase II construction loan discussed below. As of March 31, 2005, approximately 11.9% of our total consolidated indebtedness was variable rate debt.

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Owned Off-Campus Properties. The following table contains certain summary information concerning the mortgage and bridge loan indebtedness that encumbers our owned off-campus properties, excluding unamortized debt premiums, as of March 31, 2005:
                               
        Per Annum       (in thousands)
        Interest       Balance as of
Properties   Original Date   Rate   Maturity Date   March 31, 2005
                 
University Village at Boulder Creek
  12/01/2002     5.71%       Nov 2012     $ 16,479  
River Club Apartments
  07/28/2000     8.18%       Aug 2010       18,482  
River Walk Townhomes
  08/31/1999     8.00%       Sep 2009       7,660  
Village at Alafaya Club
  07/11/2000     8.16%       Aug 2010(1)       20,418  
Village at Blacksburg
  12/15/2000     7.50%       Jan 2011       21,287  
Commons on Apache
  05/14/1999     7.66%       Jun 2009       7,635  
Callaway House
  03/30/2001     7.10%       Apr 2011       19,661  
University Club Tallahassee
  11/01/2002     7.99%       Oct 2010       13,537  
The Grove at University Club
  04/01/2003     5.75%       Mar 2013       4,389  
College Club Tallahassee
  01/01/2003     6.74%       Dec 2011       8,885  
University Club Gainesville
  11/01/1999     7.88%       Nov 2009       8,518  
City Parc at Fry Street
  10/05/2004     5.96%       Sep 2014       11,776  
Exchange at Gainesville (to be renamed)
  03/29/2005     5.13%       Sep 2005(2)       37,400  
                       
 
Total
                      $ 196,127  
                       
 
(1)  Represents the Anticipated Repayment Date, as defined in the loan agreement. If the loan is not repaid on the Anticipated Repayment Date, then certain monthly payments, including excess cash flow, as defined, become due during the remaining term of the loan until the maturity date of August 2030.
 
(2)  This bridge loan was refinanced in May 2005 by entering into a permanent mortgage loan in the amount of $38.8 million at a fixed rate of 5.2% per annum.
The weighted average interest rate of such indebtedness was 6.9% per annum as of March 31, 2005. Each of these mortgages is a non-recourse obligation subject to customary exceptions and has a 30 year amortization schedule. None of the indebtedness is cross-defaulted or cross-collateralized to any other indebtedness. The loans generally may not be prepaid prior to maturity; in certain cases, prepayment is allowed, subject to prepayment penalties.
On-Campus Participating Properties. Three of our on-campus participating properties are 100% financed with project-based taxable bonds, as listed below. Under the terms of these financings, one of our special purpose subsidiaries publicly issued three series of taxable bonds and loaned the proceeds to three special purpose subsidiaries that each hold a separate leasehold interest. Although a default in payment by these special purpose subsidiaries could result in a default under one or more series of bonds, the indebtedness of any of these special purpose subsidiaries is not cross-defaulted or cross-collateralized with our indebtedness or the indebtedness of our Operating Partnership or other special purpose subsidiaries. Repayment of principal and interest on these bonds is insured by MBIA, Inc. The loans encumbering the leasehold interests are non-recourse, subject to customary exceptions.

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The following table sets forth certain information concerning these bond financings:
                       
                (in thousands)
    Original   Original   Maturity   Balance as of
Properties   Date   Term   Date   March 31, 2005
                 
University Village-PVAMU(1)
  Sep 1999   24 years   Sep 2023   $ 30,851  
University Village-TAMIU(1)
  Sep 1999   24 years   Sep 2023     4,719  
University College-PVAMU
(Phase I)(2)
  May 2001   22 years   Aug 2025     19,855  
University College-PVAMU
(Phase II)(2)
  Jul 2003   25 years   Aug 2028     4,230  
                   
 
Total
              $ 59,655  
                   
 
(1)  Part of combined bond issuance. Separate loan agreements are not cross-collateralized or cross-defaulted.
 
(2)  Two financings of the University College-PVAMU facility. The two phases of this property were placed in service in 2000 and 2003.
Contractual Obligations
The following table summarizes our contractual obligations (in thousands) as of December 31, 2004:
                                                         
    Total   2005   2006   2007   2008   2009   Thereafter
                             
Long-term debt(1)
  $ 345,771     $ 30,368     $ 17,795     $ 28,867     $ 32,626     $ 29,362     $ 206,753  
Operating leases(2)
    9,810       527       509       482       478       480       7,334  
Capital leases
    715       275       182       135       95       28       —   
Owned off-campus development project(3)
    24,977       24,977       —        —        —        —        —   
Severance agreement
    625       455       170       —        —        —        —   
                                           
    $ 381,898     $ 56,602     $ 18,656     $ 29,484     $ 33,199     $ 29,870     $ 214,087  
                                           
 
(1)  Long-term debt obligations reflect the payment of both principal and interest. For long-term obligations with a variable interest rate, the rate in effect at December 31, 2004 was assumed to remain constant over all periods presented.
 
(2)  Includes minimum annual lease payments of $0.1 million required through 2079 under the ground lease for University Village at TU.
 
(3)  Consists of the completion costs related to University Village at Sweet Home, which is scheduled to be completed in August 2005. We have entered into a contract with a general contractor for certain phases of the construction of this project. However, this contract does not generally cover all of the costs that are necessary to place the property into service, including the cost of furniture and marketing and leasing costs. The unfunded commitments presented include all such costs, not only those costs that we are obligated to fund under the construction contract. This amount does not include completion costs related to Cullen Oaks Phase II, which is funded through the construction loan described above.
Off Balance Sheet Items
We do not have any off-balance sheet items.
Funds from Operations
As defined by NAREIT, FFO represents income (loss) before allocation to minority interests (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related

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depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. We present FFO because we consider it an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.
We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our 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 distributions.
The following table presents a reconciliation of our historical FFO to our net income (loss) (in thousands, except share and per share information):
                                                   
    Three Months Ended           Year Ended
    March 31,           December 31,
        Period from   Period from    
    2005   2004   8/17/04 to 12/31/04   1/1/04 to 8/16/04   2003   2002
                         
Net income (loss)
  $ 8,192     $ 1,530     $ 1,802     $ (3,141 )   $ (944 )   $ (2,139 )
Minority interests
    87       (21 )     29       (129 )     (16 )     (30 )
(Gain) loss from dispositions of real estate
    (5,883 )     —        —        39       (16 )     (295 )
Real estate related depreciation and amortization:
                                               
 
Total depreciation and amortization
    3,424       2,259       4,158       5,815       8,868       8,077  
 
Discontinued operations depreciation and amortization
    —        87       152       219       346       334  
 
Furniture, fixtures and equipment depreciation
    (98 )     (69 )     (154 )     (181 )     (277 )     (178 )
                                     
Funds from operations (“FFO”)
  $ 5,722     $ 3,786     $ 5,987     $ 2,622     $ 7,961     $ 5,769  
                                     
FFO per share— basic
  $ 0.45             $ 0.48                          
                                     
FFO per share— diluted
  $ 0.45             $ 0.47                          
                                     
Weighted average common shares outstanding:
                                               
 
Basic
    12,622,145               12,513,130                          
                                     
 
Diluted
    12,769,939               12,634,130                          
                                     
Our FFO for the year ended December 31, 2004 was impacted by a series of charges totaling approximately $2.6 million related to our recent IPO and related formation transactions. The primary components of the charges include: (i) PIU grants of approximately $2.1 million, (ii) restricted stock unit grants of $0.1 million, and (iii) the write-off of loan origination costs and exit fees associated with the repayment of indebtedness of approximately $1.2 million. These items were partially offset by the recognition of a deferred tax asset associated with a step up in the tax basis of the on-campus participating properties owned by our TRS, resulting in an income tax benefit of $0.8 million.

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While our on-campus participating properties contributed $17.4 million, $16.5 million and $16.1 million to our revenues for the years ended December 31, 2004, 2003 and 2002, and $5.5 million and $5.3 million to our revenues for the three months ended March 31, 2005 and 2004, respectively, under our participating ground leases, we and the participating university systems each receive 50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (which includes significant amounts towards repayment of principal) and capital expenditures. A substantial portion of our revenues attributable to these properties is reflective of cash that is required to be used for capital expenditures and for the amortization of applicable property indebtedness. These amounts do not increase our economic interest in these properties or otherwise benefit us since our interest in the properties terminates upon the repayment of the applicable property indebtedness.
As noted above, FFO excludes GAAP historical cost depreciation and amortization of real estate and related assets because these GAAP items assume that the value of real estate diminishes over time. However, unlike the ownership of our owned off-campus properties, the unique features of our ownership interest in our on-campus participating properties cause the value of these properties to diminish over time. For example, since the ground/facility leases under which we operate the participating properties require the reinvestment from operations of specified amounts for capital expenditures and for the repayment of debt while our interest in these properties terminates upon the repayment of the debt, such capital expenditures do not increase the value of the property to us and mortgage debt amortization only increases the equity of the ground lessor. Accordingly, when considering our FFO, we believe it is also a meaningful measure of our performance to modify FFO to exclude the operations of our on-campus participating properties and to consider their impact on performance by including only that portion of our revenues from those properties that are reflective of our share of net cash flow and the management fees that we receive, both of which increase and decrease with the operating measure of the properties, a measure referred to herein as FFOM, as set forth below (in thousands, except share and per share information).
                                                   
    Three Months Ended           Year Ended
    March 31,           December 31,
        Period from   Period from    
    2005   2004   8/17/04 to 12/31/04   1/1/04 to 8/16/04   2003   2002
                         
Funds from operations
  $ 5,722     $ 3,786     $ 5,987     $ 2,622     $ 7,961     $ 5,769  
Elimination of operations of on-campus participating properties:
                                               
 
Net (income) loss from on-campus participating properties
    (1,310 )     (1,285 )     (1,023 )     753       (187 )     (197 )
 
Amortization of investment in on-campus participating properties
    (879 )     (854 )     (1,309 )     (2,222 )     (3,270 )     (3,158 )
                                     
      3,533       1,647       3,655       1,153       4,504       2,414  
Modifications to reflect operational performance of on-campus participating properties:
                                               
 
Our share of net cash flow(1)
    212       175       214       583       471       651  
 
Management fees
    263       273       371       489       809       796  
 
On-campus participating properties development fees(2)
    230       —        15       —        —        —   
                                     
Impact of on-campus participating properties
    705       448       600       1,072       1,280       1,447  
                                     
Funds from operations-modified for operational performance of on-campus participating properties (“FFOM”)
  $ 4,238     $ 2,095     $ 4,255     $ 2,225     $ 5,784     $ 3,861  
                                     
FFOM per share— basic
  $ 0.34             $ 0.34                          
                                     
FFOM per share— diluted
  $ 0.33             $ 0.34                          
                                     
Weighted average common shares outstanding:
                                               
 
Basic
    12,622,145               12,513,130                          
                                     
 
Diluted
    12,769,939               12,634,130                          
                                     

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(1)  50% of the properties’ net cash available for distribution after payment of operating expenses, debt service (including repayment of principal) and capital expenditures. Amounts represent actual cash received for the year-to-date periods and amounts accrued for the interim periods. As a result of using accrual-based results in interim periods and cash-based results for year-to-date periods, the sum of reported interim results may not agree to annual cash received.
 
(2)  Development and construction management fees related to the Cullen Oaks Phase II on-campus participating property.
This narrower measure of performance measures our profitability for these properties in a manner that is similar to the measure of our profitability from our services business where we similarly incur no initial or ongoing capital investment in a property and derive only consequential benefits from capital expenditures and debt amortization. We believe, however, that this narrower measure of performance is inappropriate in traditional real estate ownership structures where debt amortization and capital expenditures enhance the property owner’s long-term profitability from its investment.
Our FFOM may have limitations as an analytical tool because it reflects the unique contractual calculation of net cash flow from our on-campus participating properties, which is different from that of our off-campus owned properties. Additionally, FFOM reflects features of our ownership interests in our on-campus participating properties that are unique to us. Companies that are considered to be in our industry may not have similar ownership structures; therefore, those companies may not calculate FFOM in the same manner that we do, or at all, limiting its usefulness as a comparative measure. We compensate for these limitations by relying primarily on our GAAP and FFO results and using our FFOM only supplementally.
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 universities may limit our ability to raise rental rates.
Quantitative and Qualitative Disclosure About Market Risk
Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. The fair value of our fixed rate debt is impacted by changes in interest rates, as an example, a 1% increase in interest rates (100 basis points) would cause a $13.7 million and $16.3 million decline in the fair value of our fixed rate debt as of December 31, 2004 and 2003, respectively. Conversely, a 1% decrease in interest rates would cause a $15.9 million and $18.9 million increase in the fair value of our fixed rate debt as of December 31, 2004 and 2003, respectively. Due to the structure of our floating rate debt and interest rate protection instruments, the impact of a 1% increase or decrease in interest rates on our cash flows would not be significant at December 31, 2004 or 2003.
All of our outstanding indebtedness is fixed rate except for our revolving credit facility and the Cullen Oaks Phase II construction loan. Our revolving credit facility had an outstanding balance of $33.6 million at March 31, 2005 and bears interest at the lender’s Prime rate or LIBOR plus, in each case, a spread based on our total leverage. The Cullen Oaks Phase II construction loan had an outstanding balance of $3.1 million at March 31, 2005 and bears interest at the lender’s Prime rate or LIBOR plus 2.0%, at our election. We have in place an interest rate swap agreement, designated as a cash flow hedge, which effectively fixes the interest rate on the outstanding balance of the Cullen Oaks Phase I mortgage loan at 5.5% per annum through maturity in 2008. We anticipate incurring additional variable rate indebtedness in the future, including draws under our revolving credit facility. 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.

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OUR BUSINESS AND PROPERTIES
Our Company
We are one of the largest owners, managers and developers of high quality student housing properties in the United States in terms of beds owned, managed and developed. As of March 31, 2005, we owned and/or managed 43 student communities consisting of approximately 26,900 beds in approximately 9,700 units. We are a fully integrated, self-managed and self-administered equity REIT with expertise in the acquisition, design, financing, development, construction management, leasing and management of student housing properties.
As of March 31, 2005, our owned property portfolio consisted of 24 high-quality student housing properties, containing 15,600 beds in approximately 5,200 units. We acquired 16 of these properties and developed the remaining eight properties. We manage all 24 of our owned properties. Nineteen of our 24 owned properties are located off-campus in close proximity to 22 colleges and universities in nine states, and five of these properties are located on-campus, where we manage and participate in their ownership and management through ground/facility leases with two university systems. We refer to these five on-campus properties as our on-campus participating properties. Our owned property portfolio contains modern housing units, offers resort-style amenities and is supported by a classic resident assistant system and other student-oriented programming.
We are also one of the nation’s leaders in providing third party services to colleges and universities for the management and development of on-campus student housing. We manage 19 properties on a third party basis primarily for colleges, universities and financial institutions. These third party managed properties contain approximately 11,300 beds in approximately 4,500 units. In addition, since 1996, we have been awarded more than 30 on-campus development projects, resulting in strong relationships with some of the nation’s preeminent university systems.
We have driven innovation in the student housing industry, establishing our company as a premier owner, manager and developer in the sector. In 2004, we became the first publicly traded REIT focused solely on student housing properties. Today, operating as a fully integrated, self-managed and self-administered equity REIT, our unique and singular focus has not changed: Student housing is our core business.
Recent Activities
Since our IPO in August of 2004, we have had substantial growth activities.
Acquisitions
We have acquired seven properties totaling 3,118 beds in 978 units for an aggregate purchase price of approximately $120.2 million. In connection with these acquisitions, we assumed approximately $47.2 million of mortgage debt. Each of these acquisitions is described below.
In March 2005, we acquired an off-campus student housing property (Exchange at Gainesville, to be renamed) consisting of 1,044 beds in 396 units, near the University of Florida campus in Gainesville, Florida, for a purchase price of $47.5 million. We entered into a fixed-rate mortgage loan in the amount of $38.8 million in connection with this acquisition.
In March 2005, we acquired an off-campus student housing property (City Parc at Fry Street) consisting of 418 beds in 136 units, located near the University of North Texas in Denton, Texas, for a purchase price of $19.2 million. We assumed approximately $11.8 million of fixed-rate mortgage debt in connection with this acquisition.
In February 2005, we acquired a portfolio of five off-campus student housing properties (the “Proctor Portfolio”) for a purchase price of approximately $53.5 million. Four of the properties are located in Tallahassee, Florida and one property is located in Gainesville, Florida. These five communities contained

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1,656 beds in 446 units. We assumed approximately $35.4 million of fixed-rate mortgage debt in connection with this acquisition.
Owned Development Activities
With the commencement of the 2004/2005 academic year in late August and early September, we completed the development of three owned off-campus student housing properties at Temple University, Cal State Fresno and Cal State San Bernardino. These properties were placed into service with an opening occupancy of 98%. Collectively they contained 1,635 beds in 457 units. On January 5, 2005, we sold the Cal State San Bernardino community to the University upon exercise of its purchase option for $28.3 million and recognized a gain on sale of $5.9 million.
We are currently in the process of constructing one owned off-campus property and are in pre-development of two additional off-campus owned properties. We are also currently constructing one owned on-campus participating property. We anticipate that the total development cost relating to these activities will be approximately $150.3 million. As of March 31, 2005, we have incurred pre-development and development costs of approximately $26.1 million in connection with these properties, with the remaining development costs estimated at $124.2 million. The activities are described below:
We acquired a land parcel near the State University of New York— Buffalo and commenced development of an owned off-campus property containing 828 beds in 269 units. Total development cost is estimated to be $36.1 million. This property is currently in the final stages of construction and is pre-leased to 100% occupancy for its upcoming opening in August 2005. As of March 31, 2005, the project was approximately 68% complete, and we anticipate incurring remaining development costs of approximately $14.8 million.
We are in the later stages of design and pre-development on two owned off-campus properties with total anticipated development costs of approximately $97.2 million. One project is located in Newark, New Jersey near the campuses of the New Jersey Institute of Technology, Rutgers University and Essex County Community College. We anticipate development costs of this property to total approximately $62.3 million and plan to own this property through a joint venture that we will control with Titan Investments, a partner with whom we have previously developed four off-campus student housing properties. As of March 31, 2005, we have incurred approximately $0.5 million of pre-development costs related to this project. The second property is located in close proximity to Texas A&M University in College Station, Texas, and we estimate the total development costs of this property to be approximately $34.9 million. Both developments are currently progressing through their respective entitlement and municipal approval processes and are contingent upon receiving all necessary approvals. Depending upon the timeliness of these approvals, we plan to commence construction in Summer of 2005 for an August 2006 completion or to commence construction in Summer of 2006 for an August 2007 completion.
Our Cullen Oaks Phase II on-campus participating property, located on the campus of the University of Houston, is currently under construction with total development costs estimated to be $17.0 million. The project is scheduled to be completed in August 2005 in connection with the 2005/2006 academic year. As of March 31, 2005, the project was approximately 23% complete, and we anticipate incurring remaining development costs of approximately $12.7 million.
Senior Management Restructuring
On April 28, 2005 we announced the following restructuring of our senior management:
  James C. Hopke, Jr. rejoined our Company and was appointed as Executive Vice President and Chief Investment Officer;
 
  Brian B. Nickel, our former Executive Vice President, Chief Investment Officer and Secretary, was appointed as Executive Vice President, Chief Financial Officer and Secretary;
 
  Jonathan Graf, our former Vice President and Controller, was promoted to Senior Vice President, Chief Accounting Officer and Treasurer;

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  Greg A. Dowell, our former Senior Vice President and Chief of Operations, was promoted to Executive Vice President and Chief of Operations; and
 
  Kim K. Voss, our former Assistant Controller, was promoted to Vice President and Controller.
In April 2005, Ronnie Macejewski resigned as Senior Vice President— Development and Construction and in May 2005, Mark J. Hager resigned as Executive Vice President, Chief Financial and Accounting Officer and Treasurer.
Industry Outlook
We believe there will be a surge in college enrollment in the United States, fueling demand for student housing, and that markets in which we currently operate will experience among the largest increases in enrollment, largely as a result of favorable demographic trends. The major catalyst for enrollment increases and subsequently student housing demand in the coming decade will be the growth in the college-aged population represented by the “Echo Boom” and the increase in the percentage of graduating high school students attending college.
The “Echo Boom” generation are the children of the Baby Boomers who represent a demographic group as large as the Baby Boom generation that was born between 1946 and 1964. While the Baby Boom generation is nearing retirement, much of the Echo Boom generation, which was born between 1977 and 1997, is entering or has yet to enter adulthood. In 2003, 4.0 million Americans turned 18; by 2010, that number will peak at 4.4 million and remain above 4.0 million annually through 2020.
Additionally, the percentage of high school graduates attending college has been increasing. According to the 2002 report of the U.S. Census Bureau, the share of high school graduates choosing to attend college increased from 45% in 1997 to 65% in 2002. As such, the pool of future college students has been expanding and is poised to increase to record numbers in the coming decade.
During 2003, an estimated 16.4 million students were enrolled in colleges and universities, representing an increase of 14.6% from ten years earlier and adding 2.1 million more students to the college rolls. The Department of Education projects that nationally, enrollments will climb to 18.2 million students by 2013 for an increase of 1.8 million from 2003.
College Enrollment: 1988-2013
(GRAPH)

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The impact of demographic changes on college enrollment levels will not be felt equally across all states. During the past decade, the fastest growth of post-secondary enrollment has primarily been concentrated in the Mountain States and the Sunbelt (Southeast and Southwest). The Sunbelt, the Pacific and the Northeast are projected to be the fastest growing regions in college enrollment between 2000 and 2010, fueled by above average growth projections in the young adult population in these regions, according to the U.S. Census Bureau.
Among individual states, California, Texas, New York and Florida are projected to have the four largest populations of 18 to 24 year olds during the next decade, according to the U.S. Census Bureau. The fact that these states are major immigration gateways will also bolster future demographic and accompanying college enrollment growth.
The following table provides information with respect to the states projected to experience the most significant changes in population growth between 2000 and 2010. The states in which we currently own student housing properties are indicated in bold face type:
Population Growth Projections
(Age 18-24)
                         
        Change   % Change
Rank   State   (2000-2010)   (2000-2010)
             
   1     California     1,196,012       38.2 %
   2     Texas     395,320       18.6 %
   3     New York     302,794       18.6 %
   4     Florida     274,826       21.9 %
   5     Massachusetts     142,520       26.0 %
   6     Georgia     134,177       16.9 %
   7     North Carolina     131,863       18.2 %
   8     Virginia     122,361       18.5 %
   9     New Jersey     105,659       15.1 %
  10     Illinois     97,118       8.3 %
  11     Arizona     96,911       20.8 %
  12     Maryland     94,938       20.3 %
  13     Pennsylvania     85,846       8.1 %
  14     Washington     73,766       13.2 %
  15     Tennessee     55,653       10.2 %
  16     Connecticut     53,506       19.4 %
  17     South Carolina     49,999       13.6 %
  18     Colorado     49,826       12.0 %
  19     Michigan     38,027       4.1 %
  20     Alabama     35,155       8.1 %
        National Average     70,067       14.8 %
Source: U.S. Census Bureau
Competitive Strengths
We believe that we have the following competitive advantages:
  Student housing is our core business. We have expertise in the unique and specialized aspects of the student housing industry and focus on student housing as our core business. We are a fully integrated organization, which is capable of conducting market analysis, administering the entitlement and municipal approval process, coordinating product design, securing financing, administering the development process and providing construction management, leasing and property management services. Since our inception in 1993, we have been one of the most active

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  companies in the sector as we have been involved in the development, acquisition, ownership and/or management of more than 62 student housing properties containing more than 38,200 beds.
 
  •  One of the industry’s most experienced teams. Collectively throughout their individual careers, the seven members of our senior management team have been involved in the development, acquisition or management of more than 114 student housing properties containing more than 73,500 beds at 78 colleges and universities. Our corporate team of student housing professionals have participated in every functional aspect of the ownership, acquisition, development and management of student housing. Six corporate employees at the level of Vice President or above, including our CEO, began their careers in student housing as resident assistants while in college, providing us with a comprehensive understanding of the operational aspects of the student housing business. We believe that this history of experience provides a base of knowledge that has facilitated building a company with substantial operating and development expertise in the student housing industry.
 
  High quality student housing properties. As of March 31, 2005, our properties had an average age of only 4.7 years. Our properties are located in close proximity to, and in the case of our on-campus participating properties on the grounds of, major colleges and universities. Our typical units include private bedrooms, private or semi-private bathrooms, living rooms and full kitchens with modern appliances. Our properties typically offer extensive amenities and services, including swimming pools, basketball, sand volleyball and/or tennis courts and clubhouses with fitness centers, recreational rooms and computer labs, in an academically oriented environment that parents appreciate. Each of our properties is managed and cared for by our trained on-site staff— managers, maintenance, business personnel and resident assistants.
 
  Extensive network of university and college relationships. This network provides us with acquisition, development and management opportunities. Our clients have included some the nation’s most prominent systems of higher education, including the State University of New York System, the University of California System, the Texas A&M University System, the Texas State University System, the University of Georgia System, the University of North Carolina System, the Purdue University System, the University of Colorado System and the Arizona State University System.
 
  Industry innovators. With nearly $1 billion of development completed or in progress and in excess of $300 million of properties acquired over the last decade, we have led the industry in evolving student housing in the areas of product design concepts, site planning, unit plans and amenity offerings. We have also developed and implemented specialized student housing investment and operating systems and have created a proprietary lease administration and marketing software customized for student housing that enables us to quickly identify and respond to market changes and trends.
Our Business and Growth Strategies
Our primary business objectives are to maximize long-term stockholder value and cash flow available for distribution to our stockholders. We intend to achieve these objectives by:
  developing and acquiring owned off-campus student housing communities that meet our focused investment criteria;
 
  maximizing the profitability of our owned and third-party managed properties through proactive marketing, management and asset preservation strategies; and
 
  continuing to grow our third-party development and management services businesses to generate cash flow and build our national reputation among colleges and universities.

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The following summarizes the key aspects of our strategies:
Follow a Disciplined Off-Campus Acquisition and Development Strategy
Our investment criteria are focused on acquiring and developing high quality, modern student housing properties that are located in close proximity to major colleges and universities. We target properties that offer pedestrian, bicycle or university bus service access to their respective campuses. We acquire and develop properties that feature a differentiated product offering and are located in student housing submarkets with barriers to entry. Our focused investment criteria coupled with our superior operational capabilities provide an opportunity to increase the value and cash flow of our properties. We believe that our reputation and close relationship with colleges and universities also gives us an advantage in sourcing acquisition and development opportunities, obtaining municipal approvals and community support for our development projects, and in creating marketing or operational advantages.
We consider many factors when determining whether we should enter a market and, if so, whether through acquisition or development and how to position our property within the market, including the following:
Property Factors
  Proximity to campus
 
  Unit mix compared to competition
 
  Marketability of floor plans compared to competition
 
  Quality and marketability of amenity offering compared to competition
 
  Total housing cost to residents compared to each direct competitor
 
  Age of the structure
 
  Quality of construction and impact related to ongoing capital expenditures
 
  Quality of furniture, fixtures and equipment and impact on ongoing capital expenditures
 
  Condition and extraordinary cost impacts related to mechanical and physical plant systems
 
  Operational and marketing inefficiencies and identification of areas for improvement
 
  Internet, communications and entertainment features incorporated into the structure
 
  Reputation of the property and competitor properties among students and key university offices
University Factors
  Size of college or university
 
  Enrollment characteristics and growth projections
 
  Percent of students housed on-campus
 
  On-campus housing requirements and policies
 
  On-campus housing products and pricing
 
  Development plans for future housing
 
  University’s admission policy and expected changes to such policies
 
  Presence of university services/programs that enable establishing formal relationships

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Market Factors
  Fundamentals of the overall local housing market
 
  Fundamentals of student housing submarkets
 
  Nature of direct competitors and their product offering
 
  Impact of greater housing market on each student housing submarket
 
  Barriers to entry in each student housing submarket
 
  Student preferences related to each student housing submarket
 
  Planned or potential future student housing development
After we identify a potential student housing acquisition or development opportunity, a team consisting of in-house personnel and third parties will conduct detailed due diligence to assess the potential opportunity.
Given our significant development and acquisition activities over the last decade, we have developed active relationships with universities, developers, owners, lenders and brokers of student housing properties that allow us to identify and capitalize on acquisition and development opportunities. As a result, we have generated a proprietary database of contacts and properties that assist us in identifying and evaluating acquisition and development opportunities. Through our experienced development staff and our relationship with certain developers with whom we have previously developed off-campus student housing properties, we will continue to identify and acquire development sites in close proximity to colleges and universities that permit us to develop unique properties that offer a competitive advantage. We will also continue to benefit from opportunities derived from our extensive network with colleges and universities.
Maximize Property-Level Profitability
We seek to maximize property-level profitability by maximizing occupancy and revenue along with the implementation of prudent cost control systems. Our experienced and trained on-site management personnel administer the timely execution of our marketing, management and maintenance plans with corporate support and supervision in all functional areas.
Some of our specific expense control initiatives include:
  establishing internal controls and procedures for cost control consistently throughout our communities;
 
  appropriately staffing our properties at the site-level, minimizing multiple layers of management and increasing effectiveness;
 
  negotiating utility and service-level pricing arrangements with national and regional vendors and requiring corporate-level approval of service agreements for each community; and
 
  conducting analysis of the costs and effectiveness of each of our marketing programs via our proprietary LAMS system.
Utilize our Proprietary Marketing Systems
We believe we have developed the industry’s only specialized, fully integrated leasing administration and marketing software program, which we call LAMS. We utilize LAMS to maximize our revenue and improve the efficiency and effectiveness of our marketing and lease administration process. Through LAMS, each of our properties’ ongoing marketing and leasing efforts are supervised at the corporate office on a real time basis. Among other things, LAMS provides:
  a fully integrated prospect tracking and follow-up system. Prospect information from all types of inquiries— walk-in, telephone, web site/email, or fax— is recorded and entered into the LAMS database, and an aggressive, fully-automated follow-up and tracking program is then implemented,

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  with LAMS generating follow-up labels and electronic communications and disseminating marketing messages.
 
  a built-in marketing effectiveness program to measure the success of our marketing efforts on a real time basis. LAMS generates a weekly traffic analysis that shows the quantity of each type of inquiry received for that period as well as the marketing medium that generated each piece of traffic. In addition, LAMS generates a period-to-period comparative traffic and leasing analysis that allows us to compare the pace of the current year’s traffic and leasing activity to that of previous years. This enables us to track the effectiveness of each marketing program being utilized and to respond accordingly.
 
  a real-time monitor of lease closings and leasing terms. LAMS automatically generates closing reports allowing us to measure the staff’s closing ratios. The closing ratios are calculated by LAMS on an individual basis so that we may better evaluate performance and optimize our staffing. LAMS generates application and leasing status reports that detail the current period and year-to-date status of applications and leasing broken down by type of accommodation. This enables us to quickly identify potential problems related to pricing and/or desirability of our various types of accommodations and to respond accordingly.
 
  an automated lease generation system. Each property’s lease term and rental rate information is set up in LAMS by authorized corporate staff. This enables the corporate office to maintain tight controls on pricing changes and special promotions. LAMS generates each resident lease, eliminating the potential for manual errors of our on-site staff.
Capitalize on our Unique Understanding of Student Housing
Student housing has undergone a dramatic evolution over the past two decades. Today, students and parents factor in the quality of housing when selecting a college. Many of the members of our corporate staff have spent the majority of their careers in student housing. We witnessed, and at times have driven, this evolution. Our grass roots understanding of the business gives us a unique perspective in how we analyze student markets, design and construct our developments, underwrite our investments and lease and operate our communities.
Build Products that Meet Students’ Expectations
Many teenagers now leaving for college grew up with their own bedrooms, bathrooms and all the luxuries of the modern home. The traditional “dormitory” featuring double occupancy bedrooms, community bathrooms and low budget food service is no longer an acceptable product. That’s why our units typically feature private bedrooms, private bathrooms, large living rooms and conveniences like high-speed internet. We provide the privacy and conveniences today’s student expects.
Build a Sense of Community Through Design
Our projects are designed to facilitate resident interaction and management supervision. Unlike multifamily housing, we do not site plan our properties around the “park at your door” concept. Our buildings are typically located around spacious courtyards with parking located on the perimeters. Within the core of the community are resort-style amenities and large community centers with fitness centers, recreation/game rooms, social lounges and computer labs.
Proactively Manage Leasing Cycles and Annual Turnover
Each market has its own distinctive leasing cycle. Leasing windows can be very short and may differ among targeted student groups. If you miss a market’s cycle, recovery may not occur until the following academic year. Our LAMS proprietary leasing administration and marketing software program enables us to proactively manage this process to maximize results.

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Most of our owned, off-campus properties have 12-month leases that provide for 11.5 months of occupancy. This typically leaves only two weeks to move students out at the end of one academic year, prepare units and move students in for the next academic year, a process most traditional real estate operators are ill equipped to manage. We’ve spent a decade refining our annual turnover program to achieve maximum efficiency.
Manage Individual Lease Liability and Accounts Receivables
We lease by the bed on an individual liability basis, as opposed to joint and several unit leases used in multifamily. We require a parent or guardian to sign as a guarantor unless a student provides proof of financial capability. Parents and students find comfort, and are willing to pay a premium, in knowing they are not responsible for a roommate’s rent. With mom and dad being a party to the lease, it enables us to involve them directly whenever the need may arise.
There is a misperception that delinquent rents are very high in student housing. We consider students to be a minimal credit risk, as parents are typically the true credit behind most leases. For students with inadequate parental support, substantial financial aid is available in the form of student loans, grants and scholarships. Historically, our reserve for uncollectible rent is less than 1% of rental revenue for our owned, off-campus assets.
Dispel the “Animal House” Myth
Owners and managers once considered students undesirable tenants whose lack of respect for the community resulted in excessive damage. For the absentee landlord who doesn’t proactively maintain their student properties, this can be a self-fulfilling expectation.
We provide students with high-quality, well-amenitized product that we maintain impeccably. We then communicate to our residents the expectation that they will respect and care for the community. Students appreciate our approach and respond favorably when management is truly proactive in caring for the community. If students do not respect this philosophy, and malicious damage does occur, we demonstrate low tolerance and generally move to evict those students as an example to others.
Maintain Communities Conducive to Academic Achievement
Each of our communities is staffed to foster an academically oriented environment. Our general managers or assistant general managers live on-site. We also have on-site resident assistants who organize an array of educational, recreational and social programs. This approach assists us in gaining the respect of the subject university, which, in many cases, provides us with a competitive advantage.
Develop and Retain Personnel
We strive to develop staff from within via extensive training in each functional area and via our formal management training program, which we refer to as “Inside Track.” Each year we identify 1 to 20 management candidates from our student and professional field staff, who are invited to partake in a three-day kick-off training program to prepare them to become property managers. They then return to their respective properties where they undergo a one-year mentoring program, under the tutelage of their general manager and regional manager, where they are trained in the each functional aspect of our business. To aid in retaining field employees, we have also developed an incentive-based compensation structure for our on-site personnel.
Maintain and Develop Strategic Relationships
We seek to maintain and establish relationships with universities. We believe that establishing and maintaining relationships with universities is important to the ongoing success of our business. These relationships should continue to provide us with favored referrals to enhance our leasing efforts,

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opportunities for additional acquisitions of student housing communities and contracts for third-party services.
Efficiently Manage the Unique Structure of our Leases
Student housing properties are typically leased by the bed on an individual lease liability basis, unlike multifamily housing where leasing is by the unit. Individual lease liability limits each resident’s liability for 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 resident provides adequate proof of income. The number of lease contracts that we administer are therefore equivalent to the number of beds occupied and not the number of units. Unlike traditional multifamily housing, most of our leases commence and terminate on the same dates and may have terms of 9, 10, or 12 months. As an example, in the case of our typical 12-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. We have developed an annual turnover program to efficiently manage this process.
Operating Segments
We define business segments by their distinct customer base and service provided. We have identified the following reportable segments: Owned Off-Campus Properties, On-Campus Participating Properties and Third Party Services, which consists of Development Services and Property Management Services.
Owned Off-Campus Properties
As of March 31, 2005, our Owned Off-Campus Properties segment consisted of 19 owned off-campus properties that are in close proximity to 22 public colleges and universities in nine states. Off-campus properties are generally located in close proximity to the school campus, generally with pedestrian, bicycle, or University shuttle access. We tend to offer more relaxed rules and regulations than on-campus housing that are more appealing to upper-classmen. We believe that the support of colleges and universities can be beneficial to the success of our off-campus properties. We actively seek to have these institutions recommend our off-campus facilities to their students or to provide us with mailing lists so that we may directly market to students and parents. In some cases, the institutions actually promote our off-campus facilities in their recruiting and admissions literature. In cases where the educational institutions do not offer recommendations for off-campus housing or mailing lists, most nonetheless provide lists of suitable properties to their students, and we continually work to ensure that our properties are on these lists in each of the markets that we serve.
Due to the unique structure of our leases, as discussed above, we may experience reduced cash flows during the summer months. Additionally, changes in university admission policies could adversely affect this segment. For example, if a university reduces the number of student admissions or requires that a certain class of students (e.g., freshmen) live in a university owned facility, 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 such changes in admission policies, we may not be able to affect such marketing efforts prior to the commencement of the annual lease-up period or our additional marketing efforts may not be successful.
This segment is subject to competition for tenants with on-campus housing owned by colleges and universities. Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us (and other private sector operators), thereby decreasing their operating costs. Residence halls owned and operated by the primary colleges and universities in the markets of our owned properties typically charge lower rental rates, but offer fewer amenities than those charged by our properties. Additionally, most universities are only able to house a small percentage of their overall enrollment, and are therefore highly dependant upon the off-campus market to provide housing for their students. High-quality, well run off-campus student housing can be a critical component to an institution’s

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ability to attract and retain students. Therefore, developing and maintaining good relationships with educational institutions can result in a privately owned off-campus facility becoming, in effect, an extension of the institution’s housing program, with the institution providing highly valued references and recommendations to students and parents.
This segment also competes with national and regional owner-operators of off-campus student housing in a number of markets as well as with smaller local owner-operators. Therefore, the performance of this segment could be affected by the construction of new off-campus residences in close proximity to our existing properties, increases or decreases in the general levels of rents for housing in competing communities, increases or decreases in the number of students enrolled at one or more of the colleges or universities in the market of a property, and other general economic conditions.
On-Campus Participating Properties
Our On-Campus Participating Properties segment includes on-campus leaseholds owned by our TRS that are operated under ground/facility leases with the related university systems. We participate with two university systems in the operations and cash flows of five on-campus participating properties (one of which is currently under construction) under long-term ground/facility leases. The subject universities hold title to both the land and improvements on these properties.
Under our ground/facility leases, we receive an annual distribution representing 50% of these properties’ net cash available for distribution after payment of operating expenses (which includes our management fees), debt service (which includes repayment of principal) and capital expenditures. We also manage these properties under multi-year management agreements and are paid a management fee representing 5% of receipts.
While the terms of each specific ground/facility lease agreement tend to vary in certain respects, the following terms are generally common to all:
  a term of 30-40 years, subject to early termination upon repayment of the mortgage financing, which generally has a 25-year amortization;
 
  ground/facility lease rent of a nominal amount (e.g., $100 per annum over the lease term) plus 50% of net cash available for distribution;
 
  the right of first refusal by the educational institution to purchase our leasehold interest in the event we propose to sell it to any third party;
 
  an obligation by the educational institution to promote the project, include information relative to the project in brochures and mailings and to permit us to advertise the project;
 
  the requirement to receive the educational institution’s consent to increase rental rates by a percentage greater than the percentage increase in our property operating expenses plus the amount of any increases in debt service; and
 
  the option of the educational institution to purchase our interest in and assume management of the facility, with the purchase price calculated at the discounted present cash value of our leasehold interest.
We do not have access to the cash flows and working capital of these on-campus participating properties except for the annual net cash distribution. Additionally, a substantial portion of these properties’ cash flow is dedicated to capital reserves required under the applicable property indebtedness and to the amortization of such indebtedness. These amounts do not increase our economic interest in these properties since our interest, including our right to share in the net cash available for distribution from the properties, terminates upon the amortization of their indebtedness. Our economic interest in these properties is therefore limited to our interest in the net cash flow and management fees from these properties. Accordingly, when considering these properties’ contribution to our operations, we focus upon our share of these properties’ net cash available for distribution and the management fees that we receive from these

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properties rather than upon their contribution to our gross revenues and expenses for financial reporting purposes.
Third Party Services
We are one of the nation’s leaders in the third party development and management of on-campus housing, which has allowed us to develop key relationships with colleges and universities. These relationships, and the corresponding national reputation that we have developed in this portion of our business, benefits us when developing and managing our owned off-campus properties. The revenues we earn from our third party services comprised approximately 13% of our 2004 revenues as compared to approximately 16% of our 2003 revenues. We believe that these services continue to provide synergies with respect to our ability to identify, acquire or develop, and successfully operate, student housing properties. These services are conducted through our TRS and are described below.
While management evaluates the operational performance of our third party services based on the distinct segments identified below, at times, we also evaluate these segments on a combined basis. These services are described below.
Development Services. Our Third Party Development Services segment consists of development and construction management services that we provide for third parties that range from short-term consulting projects to long-term full-scale development and construction projects. Revenues earned on such contracts are recognized as deliverables are provided or, in the case of long-term full-scale development and construction projects, based on the percentage-of-completion method. We typically provide these services to colleges and universities seeking to modernize their on-campus student housing properties. They look to us to bring our student housing experience and expertise to ensure they develop marketable, functional and financially sustainable facilities. Educational institutions usually seek to build housing that will enhance their recruitment and retention of students while facilitating their academic objectives. Most of these development service contracts are awarded via a competitive request for proposal, or RFP, process that qualifies developers based on their overall ability to provide specialized student housing design, development, construction management, financial structuring and property management services. Our development services typically include pre-development, design and financial structuring services. Our pre-development services typically include feasibility studies for third party owners and design services. Feasibility studies include (i) initial feasibility analysis, (ii) review of conceptual design and (iii) assistance with master planning. Some of the documents produced in this process include the conceptual design documents, preliminary development and operating budgets, cash flow projections and a preliminary market assessment. Our design services include (i) coordination with the architect and other members of the design team, (ii) review of construction plans and (iii) assistance with project due diligence and project budgets.
Construction management services typically consist of coordinating and supervising the construction, equipping and furnishing process on behalf of the project owner, including site visits, hiring of a general contractor and project professionals and full coordination and administration of all activities necessary for project completion in accordance with plans and specifications and with verification of adequate insurance.
Our development services activities benefit our primary goal of owning and operating student housing properties in a number of ways. By providing these services to others, we are able to expand and refine our unit plan and community design, the operational efficiency of our material specifications and our ability to determine market acceptance of unit and community amenities. Our development and construction management personnel enable us to establish relationships with general contractors, architects and project professionals throughout the nation. Through these services, we gain experience and expertise in residential and commercial construction methodologies under various labor conditions, including right-to-work labor markets, markets subject to prevailing wage requirements and fully unionized environments.
With regard to our third party development services for colleges and universities, our clients have included some of the nation’s most prominent systems of higher education, including the State University of New York System, the University of California System, the Texas A&M University System, the Texas State

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University System, the University of Georgia System, the University of North Carolina System, the Purdue University System and the University of Colorado System. We have developed student housing properties for these clients and a majority of the time have been retained to manage these properties following their opening. As of March 31, 2005, development fees of approximately $5.1 million remained to be earned by us with respect to third party development projects. The following table provides certain information with respect to third party properties under development as of March 31, 2005:
                                   
            Balance to be    
        Fees Previously   Earned and    
    Total Contractual   Earned and   Recognized in   Scheduled
Property   Fee Amount   Recognized   2005 and 2006   Completion
                 
Saint Leo University Phase II
  $ 375     $ 199     $ 176       Aug 2005  
Vista del Campo Phase II
    3,501       168       3,333       Aug 2006  
West Virginia University— pre-development services
    400 (1)     370       30       Jun 2005  
Fenn Tower Renovation
    1,509       10       1,499       Aug 2006  
Lamar University Dining Hall
    110       22       88       Nov 2005  
                         
 
Total
  $ 5,895     $ 769     $ 5,126          
                         
 
(1)  Net of approximately $0.6 million of costs anticipated to be incurred to complete the project.
In addition, as of March 31, 2005, we have been selected to perform construction administration services related to a student housing property for West Virginia University. These services provide a net construction administration fee of approximately $0.3 million and are anticipated to commence in August 2005. We have also received a “Notice of Intent to Award” from Arizona State University indicating that we have been selected to provide design, development and management of student housing on the Tempe Campus. In addition, we have also been selected by Hope International University in Fullerton, California to design and oversee a comprehensive redevelopment of its campus, including the development of residence halls, student apartments and faculty housing. Subject to the successful structuring and closing of the Arizona State and Hope transactions, we anticipate that the projects will commence construction during the second or third quarter of 2006.
Property Management Services. Our Third Party Property Management Services segment includes revenues generated from third party management contracts in which we are typically responsible for all aspects of a property’s operations, including marketing, leasing administration, facilities maintenance, business administration, accounts payable, accounts receivable, financial reporting, capital projects and residence life student development. As of March 31, 2005, we provided third party management services for 19 student housing properties that represented approximately 11,300 beds in approximately 4,500 units, 13 of which we developed. We provide these services pursuant to multi-year management agreements (generally ranging between two to five years).
Competition
Competition from Universities and Colleges
We are subject to competition for student-tenants from on-campus housing operated by educational institutions, charitable foundations and others. On-campus student housing has certain inherent advantages over off-campus student housing in terms of physical proximity to the university campus, captive student body, perception of a more secure environment and the fuller integration of on-campus facilities into the academic community. Colleges and universities can generally avoid real estate taxes and borrow funds at lower interest rates than us (and other private sector operators), thereby decreasing their costs of operating new on-campus student housing. Residence halls owned and operated by the primary colleges and universities in the markets of our owned properties typically charge lower rental rates, but offer fewer amenities than those charged by our properties.

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On the other hand, most universities are able to house only a small percentage of their overall enrollment, and are therefore highly dependant upon the off-campus market to provide housing for their students. High-quality, well run off-campus student housing can be a critical component to an institution’s ability to attract and retain students. Accordingly, a university or college, rather than being a competitor, may actually become a potential customer of off-campus student housing. Developing and maintaining a good relationship with an educational institution can result in a privately owned off-campus facility becoming, in effect, an extension of the institution’s housing program, with the institution providing highly valued references and recommendations to students and parents.
Competition from Public and Private Owners
We compete with several regional and national owner-operators of off-campus student housing in a number of markets, including GMH Communities Trust and Education Realty Trust, Inc., each of which has recently completed an initial public offering of its common stock and, in connection therewith, has publicly disclosed its intention to grow its student housing business. We also compete with smaller local or regional owner-operators. Currently, the industry is fragmented with no participant holding a significant market share. There are a number of student housing complexes that are located near to or in the same general vicinity of many of our owned properties and that compete directly with us. We believe that a number of other large national companies with substantial financial resources may be potential entrants in the student housing business. The entry of one or more of these companies could increase competition for students and for the acquisition or development of other student housing properties.
Our Properties
Our properties generally are modern facilities, and amenities at most of our properties include a swimming pool, basketball courts and a large community center featuring a fitness center, computer center, tanning beds, study areas and a recreation room with billiards and other games. Some properties also have a jacuzzi/hot tub, volleyball courts, tennis courts and in-unit washers and dryers. Two of our off-campus properties completed development and opened in Fall 2004, one owned off-campus property is currently under construction with a scheduled completion date of August 2005, and one on-campus participating property is currently under construction with a scheduled completion date of August 2005. Lease terms are generally 12 months at our off-campus properties and 9 months at our on-campus participating properties. The average age of our properties is 4.7 years.
We own fee title to all of these properties except for:
  The Callaway House, in which we own an 80% partnership interest and are entitled to significant preferred distributions;
 
  University Village at TU, which is subject to a 75-year ground lease from Temple University (with four additional six-year extensions); and
 
  Five on-campus participating properties held under ground/facility leases with two university systems.

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The following table presents certain information about our owned property portfolio as of March 31, 2005.
                                         
    Year                    
    Acquired/           Occupancy        
Property   Developed   Location   Primary University Served   Rates (1)   Units   Beds
                         
Off-Campus Properties:
                                       
 1. Commons On Apache
  1999     Tempe, AZ     Arizona State University Main Campus     100.0 %     111       444  
 2. The Village at Blacksburg
  2000     Blacksburg, VA     Virginia Polytechnic Institute and State University     98.6 %     288       1,056  
 3. The Village on University
  1999     Tempe, AZ     Arizona State University Main Campus     99.1 %     288       918  
 4. River Club Apartments
  1999     Athens, GA     The University of Georgia– Athens     95.5 %     266       794  
 5. River Walk Townhomes
  1999     Athens, GA     The University of Georgia– Athens     97.1 %     100       340  
 6. The Callaway House(2)
  2001     College Station, TX     Texas A&M University     101.3 %     173       538  
 7. The Village at Alafaya Club
  2000     Orlando, FL     The University of Central Florida     97.4 %     228       840  
 8. The Village at Science Drive
  2001     Orlando, FL     The University of Central Florida     99.3 %     192       732  
 9. University Village at Boulder Creek
  2002     Boulder, CO     The University of Colorado at Boulder     87.7 %     82       309  
10. University Village at Fresno
  2004     Fresno, CA     California State University, Fresno     98.8 %     105       406  
11. University Village at TU
  2004     Philadelphia, PA     Temple University     98.8 %     220       749  
12. University Village at Sweet Home(3)
  2005     Amherst, NY     State University of New York– Buffalo     —        269       828  
13. University Club Tallahassee
  2005     Tallahassee, FL     Florida State University     93.4 %     152       608  
14. The Grove at University Club
  2005     Tallahassee, FL     Florida State University     98.4 %     64       128  
15. College Club Tallahassee
  2005     Tallahassee, FL     Florida A&M University     92.4 %     96       384  
16. The Greens at College Club
  2005     Tallahassee, FL     Florida A&M University     96.9 %     40       160  
17. University Club Gainesville
  2005     Gainesville, FL     University of Florida     98.9 %     94       376  
18. City Parc at Fry Street
  2005     Denton, TX     University of North Texas     94.7 %     136       418  
19. Exchange at Gainesville (to be renamed)
  2005     Gainesville, FL     University of Florida     95.6 %     396       1,044  
                                 
Total off-campus properties
                    97.2 %     3,300       11,072  
On-Campus Participating Properties:
                                       
20. University Village– PVAMU
  1996/97/98     Prairie View, TX     Prairie View A&M University     93.0 %     612       1,920  
21. University College– PVAMU
  2000/2003     Prairie View, TX     Prairie View A&M University     95.0 %     756       1,470  
22. University Village– TAMIU
  1997     Laredo, TX     Texas A&M International University     70.2 %     84       252  
23. Cullen Oaks Phase I
  2001     Houston, TX     The University of Houston     99.6 %     231       525  
24. Cullen Oaks Phase II(3)
  2005     Houston, TX     The University of Houston     —        180       354  
                                 
Total on-campus participating properties
                    93.1 %     1,863       4,521  
                                 
Total– all properties
                    96.0 %     5,163       15,593  
                                 
 
(1)  Occupancy rates are calculated as of March 31, 2005. Occupancy is based on the number of total occupied beds (including beds occupied by staff) divided by total beds.
 
(2)  Also has a food service facility.
 
(3)  Currently under development with a scheduled completion date of August 2005.

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The following table sets forth certain comparative information as of May 27, 2005 and May 28, 2004 (the last Friday in May for each period reported) regarding the leasing status of our owned off-campus properties for the 2005/2006 and 2004/2005 academic years, respectively.
                                                           
    Applications   % of   Applications            
    and Leases   Rentable   and Leases   Variance to        
    as of   Beds as of   as of   Prior Year       Total
    May 27,   May 27,   May 28,       Rentable   Design
Applications and Leases   2005   2005   2004   Beds   %   Beds(1)   Beds
                             
Commons of Apache
    444       100.0 %     444       0       0.0 %     444       444  
The Village at Blacksburg
    1,034       98.7 %     1,030       4       0.4 %     1,048       1,056  
The Village on University
    515       56.7 %     656       (141 )     (21.5 )%     909       918  
River Club Apartments
    719       92.8 %     543       176       32.4 %     775       794  
River Walk Townhomes
    296       88.9 %     316       (20 )     (6.3 )%     333       340  
The Callaway House
    642       121.8 %     569       73       12.8 %     527       538  
The Village at Alafaya Club
    581       70.1 %     586       (5 )     (0.9 )%     829       840  
The Village at Science Drive
    717       99.3 %     718       (1 )     (0.1 )%     722       732  
University Village at Boulder Creek
    168       56.2 %     218       (50 )     (22.9 )%     299       309  
University Village Fresno
    336       84.8 %     218       118       54.1 %     396       406  
University Village at TU
    728       99.3 %     734       (6 )     (0.8 )%     733       749  
University Village at Sweet Home
    835       102.2 %     n/a       n/a       n/a       817       828  
University Club Tallahassee(2)
    744       102.5 %     n/a       n/a       n/a       726       736  
College Club Tallahassee(3)
    392       73.1 %     n/a       n/a       n/a       536       544  
University Club Gainesville
    267       71.8 %     n/a       n/a       n/a       372       376  
City Parc at Fry Street
    196       47.6 %     n/a       n/a       n/a       412       418  
Exchange at Gainesville (to be renamed)
    949       92.0 %     n/a       n/a       n/a       1,032       1,044  
                                           
 
Total
                                            10,910       11,072  
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