CHARLOTTE—Student housing developer Campus Crest Communities has posted its first quarter earnings report. Revenues totaled $32 million, a $2 million net income loss, compared to $33 million in revenues and $1 million net income loss in the year-ago period.

Campus Crest delivered same-store net operating income (NOI) of $11.5 million at
90.5% occupancy and a 55% margin. Leasing for all of its 69 student housing properties was 69.4% compared to 67.9% in the year-ago period, a 150 basis points increase.

The firm reports continued progress on eight student housing developments and two redevelopment projects. The projects will deliver 7,455 beds within about 0.3 miles of campus in time for the 2014/2015 academic year.

“Our preleasing results for the 2014-15 academic year are up 580 basis points over the last year in our growth portfolio,” Ted Rollins, chairman and CEO of Campus Crest, said on the earnings call. “This represents an expansion from the 540 basis points we reported in April. Our six new growth developments are 49.3% prelease for this coming academic year. Our three new evo projects which are located in urban markets and represent a significantly different leasing dynamic are 5.3% leased.”

In January 2014, Campus Crest acquired from Harrison Street Real Estate Capital the remaining 80% equity interest in The Grove at Denton, Texas, for about $7.7 million.
As of March 31, the student housing developer had $14.3 million of cash and $20.8 million of restricted cash, with $15.6 million coming from the December 2013 sale of four wholly-owned Grove-branded student housing properties that were structured as a 1031 exchange.

“Total NOI met our forecast with lower revenues offset by lower expense,” RBC Capital Markets analyst Mike Salinsky wrote in a research note. “Across the same store portfolio, revenues were 22.4% year over year with expenses -1.8% which yielded a -2.8% drop in NOI. Lower year-over-year occupancy of 290bps drove revenue shortfall with rental RevPOB up .8%. Lower admin/bad debt aided expenses.”

Leasing for the company's Copper Beach brand portfolio of 28 operating properties was 77% versus 82.8% in the year-ago period. That's a 580 bps decrease. Campus Crest blamed this dip primarily on three markets that are absorbing more slowly than prior years.

“While CCG's operating results in 1Q were modestly disappointing, expense controls were a highlight,” an MLV analyst wrote in a research note. “However, the resl focus regarding CCG shares is on the Cooper Beech dilemma and broader valuation. Management indicated on the 1Q call that they believe they have made solid progress toward finding a resolution with the Copper Beach seller, who management believes is willing to take out-of-the-money OP units as a substantial portion of the remaining balance due. With strong pre-leasing across CCG's same-store wholly-owned properties, a shifting focus away from Copper Beach may be a positive for the stock.”

Based on management's current estimates of market conditions and future operating results, the company reaffirmed its previous guidance for fiscal year 2014 FFOA per fully diluted share of $0.72 to $0.74. The company had net availability under its revolving credit facility of $103.5 million as of March 31, 2014.