Unassociated Document

Randy Churchey, Education Realty Trust’s President and Chief Executive Officer stated, “We continue to make progress on improving our preleasing for the 2010/2011 school year. We attribute this preleasing improvement to the solid execution of our key initiatives, including a more analytical approach toward balancing rate and occupancy, improved systems to monitor our daily progress at each community and improved property websites generating additional traffic.”

“I am also proud that our team was able to take advantage of our deep industry relationships and strong balance sheet to secure two new development projects including an on-campus “ONE Plan” project at the University of Texas at Austin. These projects, along with our capital recycling initiatives and the commencement of new third-party developments, position the Company to grow earnings and cash flow in the coming years.”

FFO for the second quarter of 2010 was $6.9 million compared to $7.3 million for the same period last year. FFO per share/unit for the second quarter was $0.12 as compared to $0.24 in the second quarter of 2009. The decline in FFO per share/unit was due to a 28.2 million increase in the average shares/units outstanding year over year related to the Company’s follow-on common stock offering in July 2009.

Same-community net operating income was $14.3 million for the second quarter of 2010 on a revenue decline of 1.1%, and relatively flat operating expenses. Net operating income improved from the 4.1% decline experienced in the first quarter of 2010 due to stronger occupancy retention in the second quarter of 2010 compared to the second quarter of 2009. As a result, operating margins were down 60 basis points to 53.2%.

Net operating income for the Legacy-communities was $11.7 million for the second quarter of 2010 on a revenue decline of 2.2%, or $0.5 million, and flat operating expenses. Revenue was mainly impacted by a 2.1% decline in rental rates and a 0.5% decrease in other rental revenue. Occupancy was up approximately 0.4% from the prior year. The average operating margin for the Legacy-communities was 54.5%, approximately 100 basis points below the second quarter of 2009.

Net operating income for the Place-communities increased 5.5%, or $0.1 million, for the second quarter of 2010 on revenue growth of 3.7%, or $0.2 million, and an operating expense increase of just under $0.1 million. The revenue growth is a result of an approximate 3.4% improvement in occupancy, a decline in rental rates of approximately 0.2% and a 0.5% increase in other rental revenue. As a result, operating margins improved approximately 80 basis points to 47.8%.

Second quarter 2010 average physical and economic occupancies for the Legacy-communities were 88.2% and 86.6%, respectively, compared to 87.7% and 86.3% for the same period in 2009. The Place-communities had physical and economic occupancies of 81.9% and 78.8%, respectively, compared to 79.0% and 76.7% in the second quarter of 2009. Physical occupancy is the average of occupied rooms to available rooms at the end of each month, whereas economic occupancy represents net apartment rent on a U.S. GAAP basis as a percentage of potential rent and reflects the impact of straight-line rent.

The Company was awarded a ONE Plan on-campus development project at the University of Texas at Austin by The University of Texas System Board of Regents. This is the Company’s second ONE Plan development. While the final design and total cost is still to be finalized, the project is projected for a summer 2013 opening. Commencement of construction is subject to execution of final definitive agreements, city approval processes and confirmation of development costs.

In July, the Company commenced construction on a new graduate student housing project in the Science + Technology Park at Johns Hopkins. Scheduled to open in the summer of 2012, the Company will develop and manage the 572-bed, 20-story building which will draw residents from the more than 4,000 students and fellows attending the Johns Hopkins Medical School, the School of Nursing, and the Bloomberg School of Public Health located on the east campus. The Company will invest in the project in the form of an $18.0 million second mortgage and will also provide a repayment guarantee on the construction first mortgage. Due to this financial involvement in a third-party development, the project is considered a participating-development project, and the Company’s statements of operations will recognize the development services revenue and interest income earned on the Second Mortgage when the Second Mortgage is repaid. The Company’s calculation of Funds From Operations – Adjusted will, however, include the economic benefits of these items on a quarterly basis.

“We anticipated that the improvement in the credit markets over the past twelve months along with additional new third-party development awards would result in increased construction starts.” stated Tom Trubiana, Education Realty Trust’s Executive Vice President and Chief Investment Officer. “Based on the rising velocity of our activities over the last several months, it is becoming apparent that this could be the start of an evolving trend.”

The Company entered into a lease agreement with Macon State University under which the University will master lease the Macon Place community beginning August 1, 2010. The lease has a term of one year and also includes an option for the University to purchase the property. The monthly lease payments of $30,000 are more than the monthly net operating income achieved by or forecasted for the property in 2010. Because the University will be responsible for leasing the community this fall and the Company will not have individual leases with students during the master lease, Macon Place has been removed from the Company’s 2010-2011 preleasing statistics. The community will also be removed from same-community operating information starting in the third quarter of 2010.

On June 30, 2010, the Company had cash and cash equivalents totaling $23.3 million and no outstanding borrowings on its revolving credit facility, which had a borrowing base availability of $41.9 million. In addition, the Company has two communities unencumbered by debt and eligible for inclusion in the revolving credit facility. If these communities were included, the Company estimates that the borrowing base availability would be approximately $52.0 million. The Company’s debt to gross asset value was 42.1%, its net debt was 7.6x EBITDA, and its interest coverage ratio was 2.1x.

Approximately 94% of the Company’s indebtedness has either fixed or capped interest rates. The Company addressed its only 2010 maturity by paying down $5.0 million of the construction loan on its community at Southern Illinois University and obtaining an extension of the remaining debt through June 2012. The Company has one other project-based construction loan with a balance of $8.8 million that will reach initial maturity in September of 2011. Upon initial maturity, the Company expects to also exercise the two year extension option on this loan.

Based upon management’s current estimates, the Company is raising its guidance for full year 2010 FFOA per share/unit to a range of $0.38 to $0.42 from its previous guidance of $0.34 to $0.40. Consistent with prior guidance, this outlook does not include the impact of any dispositions, acquisitions, new third-party development or management contracts, additional ONE Plan developments, capital transactions or corporate restructuring costs.

The conference call will be accessible by telephone and the Internet. To access the call, participants from within the U.S. may dial (877) 941-4774, and participants from outside the U.S. may dial (480) 629-9760. The passcode for this call is 4325599. Participants may also access the call via live webcast by visiting the Company’s investor relations website at www.educationrealty.com.

The replay of the call will be available at approximately 7:00 p.m. Eastern Time on July 22, 2010 through midnight Eastern Time on August 5, 2010. To access the replay, the domestic dial-in number is (800) 406-7325, the international dial-in number is (303) 590-3030, and the passcode is 4325599. The archive of the webcast will be available on the Company’s website for a limited time.

Statements about the Company’s business that are not historical facts are “forward-looking statements.” Forward-looking statements are based on current expectations. You should not rely on our forward-looking statements because the matters they describe are subject to known and unknown risks and uncertainties that could cause the Company’s future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such statements. Such risks are set forth under the captions “Item 1A. Risk Factors” and “Forward-Looking Statements” in our annual report on Form 10-K and under the caption “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” (or similar captions) in our quarterly reports on Form 10-Q, and as described in our other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any guidance or other forward-looking statement, whether as a result of new information, future developments, or otherwise.

As defined by the National Association of Real Estate Investment Trusts, FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The Company presents FFO available to all stockholders and unitholders because it considers it an important supplemental measure of the Company’s operating performance, assists in the comparison of our operating performance between periods to that of different companies and believes 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. As such, the Company also excludes the impact of noncontrolling interest in the calculation. 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.

Education Realty Trust, Inc. (NYSE:EDR) is one of America’s largest owners, developers and operators of collegiate student housing. EDR is a self-administered and self-managed real estate investment trust that owns or manages 64 communities in 22 states with 37,830 beds. For more information please visit the Company's website at www.educationrealty.com.

	June 30, 2010			December 31, 2009
	(unaudited)
Assets
Student housing properties, net	$	743,462		$	749,884
Cash and cash equivalents		23,348			31,169
Restricted cash		5,167			4,579
Other assets		19,078			18,981

Total assets	$	791,055		$	804,613

Liabilities and equity
Liabilities:
Mortgage and construction loans, net of unamortized premium/discount	$	399,243		$	406,365
Accounts payable and accrued expenses		14,708			11,658
Deferred revenue		7,071			10,346
Total liabilities		421,022			428,369

Commitments and contingencies		-			-

Redeemable noncontrolling interests		10,725			11,079

Equity:
Education Realty Trust, Inc. stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 56,823,288 and 56,705,605 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		568			567
Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding		-			-
Additional paid-in capital		407,796			410,455
Accumulated deficit		(49,056	)		(48,636	)
Total Education Realty Trust, Inc. stockholders’ equity		359,308			362,386
Noncontrolling interest		-			2,779
Total equity		359,308			365,165

Total liabilities and equity	$	791,055		$	804,613

	Three months ended June 30,
	2010			2009
Revenues:
Student housing leasing revenue	$	28,394		$	27,967
Third-party development services		648			1,259
Third-party management services		707			723
Operating expense reimbursements		1,957			2,036
Total revenues		31,706			31,985

Operating expenses:
Student housing leasing operations		13,208			12,929
General and administrative		4,036			3,841
Depreciation and amortization		7,475			7,110
Reimbursable operating expenses		1,957			2,036
Total operating expenses		26,676			25,916

Operating income		5,030			6,069

Nonoperating expenses:
Interest expense		5,518			6,150
Amortization of deferred financing costs		334			218
Interest income		(111	)		(105	)
Gain on extinguishment of debt		-			(830	)
Total nonoperating expenses		5,741			5,433

Income (loss) before equity in earnings of unconsolidated entities, income taxes, redeemable noncontrolling interests and discontinued operations		(711	)		636

Equity in earnings of unconsolidated entities		7			46
Less: Income tax (benefit) expense		(102	)		502
Less: Loss attributable to redeemable noncontrolling interests		(16	)		(63	)
Loss from discontinued operations		-			(2	)
Net income (loss)		(586	)		241

Less: Net income attributable to the noncontrolling interests		4			10
Net income (loss) attributable to Education Realty Trust, Inc.	$	(590	)	$	231

Earnings per share information:
Net income (loss) attributable to Education Realty Trust, Inc. common stockholders per share – basic & diluted:	$	(0.01	)	$	0.01

Weighted-average common shares outstanding – basic		56,933			28,520
Weighted-average common shares outstanding – diluted		56,933			29,641

	Six months ended June 30,
	2010			2009
Revenues:
Student housing leasing revenue	$	58,045		$	57,280
Third-party development services		1,341			2,716
Third-party management services		1.573			1,632
Operating expense reimbursements		3,865			4,226
Total revenues		64,824			65,854

Operating expenses:
Student housing leasing operations		26,646			26,099
General and administrative		8,336			7,835
Depreciation and amortization		14,891			14,274
Reimbursable operating expenses		3,865			4,226
Total operating expenses		53,738			52,434

Operating income		11,086			13,420

Nonoperating expenses:
Interest expense		11,129			12,502
Amortization of deferred financing costs		668			519
Interest income		(228	)		(154	)
Gain on extinguishment of debt		-			(830	)
Total nonoperating expenses		11,569			12,037

Income (loss) before equity in earnings of unconsolidated entities, income taxes, redeemable noncontrolling interests and discontinued operations		(483	)		1,383

Equity in earnings of unconsolidated entities		86			146
Less: Income tax (benefit) expense		(176	)		690
Less: Income attributable to redeemable noncontrolling interests		189			138
Loss from discontinued operations		-			(18	)
Net income (loss)		(410	)		683

Less: Net income attributable to the noncontrolling interests		10			19
Net income (loss) attributable to Education Realty Trust, Inc.	$	(420	)	$	664

Earnings per share information:
Net income (loss) attributable to Education Realty Trust, Inc. common stockholders per share – basic & diluted:	$	(0.01	)	$	0.02

Weighted-average common shares outstanding – basic		56,847			28,518
Weighted-average common shares outstanding – diluted		56,847			29,639

	Three months ended June 30,						Six months ended June 30,
	2010			2009			2010			2009

Net income (loss) attributable to Education Realty Trust, Inc.	$	(590	)	$	231		$	(420	)	$	664

Real estate related depreciation and amortization		7,373			6,954			14,683			13,959
Equity portion of real estate depreciation and amortization on equity investees		124			122			248			244
Depreciation and amortization of discontinued operations		-			-			-			25
Noncontrolling interests		(12	)		(53	)		199			157
Funds from operations (“FFO”)	$	6,895		$	7,254		$	14,710		$	15,049

Elimination of refinancing and reorganization charges:
Elimination of gain on extinguishment of debt		-			(830	)		-			(830	)
Reorganization/severance costs, net of tax		134			-			307			-
Impact of refinancing and reorganization charges	$	134		$	(830	)	$	307		$	(830	)

Funds from operations – adjusted (“FFOA”)	$	7,029		$	6,424		$	15,017		$	14,219

FFO per weighted average share/unit (1)	$	0.12		$	0.24		$	0.25		$	0.50
FFOA per weighted average share/unit (1)	$	0.12		$	0.22		$	0.26		$	0.48

Weighted average shares/units (1)		58,186			29,894			58,141			29,888

	Year ending December 31, 2010
	Low End			High End

Net loss attributable to Education Realty Trust, Inc.	$	(9,230	)	$	(6,861	)

Real estate related depreciation and amortization		29,771			29,771
Equity portion of real estate depreciation and amortization on equity investees		513			513
Noncontrolling interest		370			330
Funds from operations ("FFO")	$	21,424		$	23,753

Elimination of reorganization charges:
Reorganization/severance costs, net of tax		307			307
Impact of reorganization charges		307			307

FFO on Participating Developments
Deferred fees and interest on Johns Hopkins project, net		390			390
FFO on Participating Developments		390			390

Funds from operations – adjusted (“FFOA”)	$	22,121		$	24,450

FFO per weighted average share/unit (1)	$	0.37		$	0.41
FFOA per weighted average share/unit (1)	$	0.38		$	0.42

Weighted average shares/units (1)		58,214			58,214