8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8‑K

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 7, 2014

Education Realty Trust, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	001-32417	20-1352180
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

999 South Shady Grove Road, Suite 600 Memphis, Tennessee	38120
(Address of Principal Executive Offices)	(Zip Code)

901-259-2500

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events.

Education Realty Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), is disclosing certain financial and related information. Education Realty Trust, Inc. is thesole owner of Education Realty OP GP, Inc., a Delaware corporation and the sole general partner of the Operating Partnership. The consolidated financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations are filed as exhibits to this report and are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Consolidated Financial Statements of Education Realty Operating Partnership, L.P. as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013
99.2	Management's Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013
99.3	Condensed Consolidated Financial Statements of Education Realty Operating Partnership, L.P. as of September 30, 2014 and December 31, 2013, and for the nine month periods ended September 30, 2014 and 2013
99.4	Management's Discussion and Analysis of Financial Condition and Results of Operations as of September 30, 2014 and December 31, 2013, and for the nine month periods ended September 30, 2014 and 2013

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EDUCATION REALTY TRUST, INC.
Date: November 7, 2014	By:	/s/ Edwin B. Brewer, Jr.
		Edwin B. Brewer, Jr. Executive Vice President and Chief Financial Officer

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Consolidated Financial Statements of Education Realty Operating Partnership, L.P. as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013
99.2	Management's Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013
99.3	Condensed Consolidated Financial Statements of Education Realty Operating Partnership, L.P. as of September 30, 2014 and December 31, 2013, and for the nine month periods ended September 30, 2014 and 2013
99.4	Management's Discussion and Analysis of Financial Condition and Results of Operations as of September 30, 2014 and December 31, 2013, and for the nine month periods ended September 30, 2014 and 2013

EX-99.1

EXHIBIT 99.1

Education Realty Operating Partnership, L.P.

Table of Contents

Consolidated Financial Statements                                    

	Page
Report of Independent Registered Public Accounting Firm	1
Consolidated Balance Sheets as of December 31, 2013 and 2012	2
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011	3
Consolidated Statements of Changes in Partners' Capital and Noncontrolling Interests for the years ended December 31, 2013, 2012 and 2011	5
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	6
Notes to the Consolidated Financial Statements	8

All other schedules are omitted since the required information is either not required or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of

Education Realty Operating Partnership, L.P.

Memphis, Tennessee

We have audited the accompanying consolidated balance sheets of Education Realty Operating Partnership, L.P. and subsidiaries (the “Operating Partnership”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in partners' capital and noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Operating Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Memphis, Tennessee

November 7, 2014

1

CONSOLIDATED BALANCE SHEETS

As of December 31,

	2013		2012
	(Amounts in thousands, except unit data)
Assets:
Collegiate housing properties, net	$	1,388,885	$	1,061,002
Assets under development	116,787		159,264
Corporate office furniture, net	3,249		3,007
Cash and cash equivalents	22,073		17,039
Restricted cash	12,253		6,410
Student contracts receivable, net	807		708
Receivable from managed third parties	361		629
Notes receivable	18,125		21,000
Goodwill and other intangibles, net	3,822		4,455
Other assets	44,203		51,173
Total assets	$	1,610,565	$	1,324,687
Liabilities:
Mortgage and construction loans, net of unamortized premium	$	422,681	$	398,846
Unsecured revolving credit facility	356,900		79,000
Accounts payable	2,289		1,749
Accrued expenses	65,357		55,374
Deferred revenue	23,498		17,964
Total liabilities	870,725		552,933
Commitments and contingencies (see Note 16)	—		—
Redeemable limited partner units	7,512		7,780
Redeemable noncontrolling interests	2,359		1,164
Partners' capital:
General partner - 20,760 units outstanding at both December 31, 2013 and 2012	190		196
Limited partners - 114,719,395 and 113,041,692 units issued and outstanding as of December 31, 2013 and 2012, respectively	725,534		757,526
Total partners' capital	725,724		757,722
Noncontrolling interests	4,245		5,088
Total partners' capital	729,969		762,810
Total liabilities and partners' capital	$	1,610,565	$	1,324,687

See accompanying notes to the consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31,

	2013			2012			2011
	(Amounts in thousands, except unit and per unit data)
Revenues:
Collegiate housing leasing revenue	$	167,476		$	124,087		$	91,517
Third-party development consulting services	2,989			820			4,103
Third-party management services	3,697			3,446			3,336
Operating expense reimbursements	10,214			9,593			8,604
Total revenues	184,376			137,946			107,560
Operating expenses:
Collegiate housing leasing operations	79,957			59,524			44,892
Development and management services	6,477			6,266			5,506
General and administrative	7,678			7,910			6,810
Depreciation and amortization	48,098			33,240			23,858
Ground lease expense	7,622			6,395			5,498
Reimbursable operating expenses	10,214			9,593			8,604
Total operating expenses	160,046			122,928			95,168
Operating income	24,330			15,018			12,392
Nonoperating expenses:
Interest expense	17,526			14,390			17,274
Amortization of deferred financing costs	1,758			1,215			1,197
Loss on extinguishment of debt	—			—			351
Interest income	(447		)	(283		)	(175		)
Total nonoperating expenses	18,837			15,322			18,647
Income (loss) before equity in losses of unconsolidated entities, income taxes and discontinued operations	5,493			(304		)	(6,255		)
Equity in losses of unconsolidated entities	(203		)	(363		)	(447		)
Income (loss) before income taxes and discontinued operations	5,290			(667		)	(6,702		)
Income tax expense (benefit)	203			(884		)	(95		)
Income (loss) from continuing operations	5,087			217			(6,607		)
Discontinued operations:
Income (loss) from operations of discontinued operations	(4,369		)	2,924			(6,556		)
Gain on sale of collegiate housing properties	3,913			5,496			2,388
Income (loss) from discontinued operations	(456		)	8,420			(4,168		)
Net income (loss)	4,631			8,637			(10,775		)
Less: Net income attributable to the noncontrolling interests	227			92			188
Net income (loss) attributable to unitholders	$	4,404		$	8,545		$	(10,963	)

3

	2013			2012		2011
	(Amounts in thousands, except unit and per unit data)
Earnings (loss) per unit information:
Net income (loss) attributable to unitholders - basic and diluted:
Continuing operations	$	0.04		$	—	$	(0.09	)
Discontinued operations	—			0.08		(0.05		)
Net income (loss) attributable to unitholders per unit	$	0.04		$	0.08	$	(0.14	)
Weighted average units outstanding – basic	115,262,339			102,109,701		76,389,156
Weighted average units outstanding – diluted	115,469,596			102,316,958		76,389,156
Amounts attributable to unitholders:
Income (loss) from continuing operations, net of noncontrolling interests	$	4,857		$	194	$	(6,843	)
Income (loss) from discontinued operations, net of noncontrolling interests	(453		)	8,351		(4,120		)
Net income (loss)	$	4,404		$	8,545	$	(10,963	)

See accompanying notes to the consolidated financial statements.

4

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND NONCONTROLLING INTERESTS

Years Ended December 31,

(Amounts in thousands, except unit data)

	General Partner				Limited Partners				Noncontrolling Interests			Total
	Units	Amount			Units	Amount
Balance as of December 31, 2010	20,760	$	205		58,636,296	$	324,538		$	—		$	324,743
Issuance of units in exchange for contributions of gross equity offering proceeds	—	—			32,996,205	275,622			—			275,622
Offering costs and underwriters discount paid on behalf of the Trust	—	—			—	(11,288		)	—			(11,288		)
Vesting of restricted stock and restricted stock units	—	—			44,280	360			—			360
Conversion of PIUs	—	—			—	1			—			1
Amortization of restricted stock awards	—	—			103,147	1,165			—			1,165
Distributions	—	(5		)	—	(17,717		)	—			(17,722		)
Contributions from noncontrolling interests	—	—			—	—			1,487			1,487
Net income (loss)	—	(1		)	—	(11,013		)	—			(11,014		)
Balance as of December 31, 2011	20,760	199			91,779,928	561,668			1,487			563,354
Issuance of units in exchange for contributions of gross equity offering proceeds	—	—			20,987,826	229,219			—			229,219
Offering costs and underwriters discount paid on behalf of the Trust	—	—			—	(8,954		)	—			(8,954		)
Vesting of restricted stock awards and restricted stock units	—	—			32,286	360			—			360
Amortization of restricted stock awards	—	—			241,652	768			—			768
Distributions	—	(7		)	—	(33,952		)	—			(33,959		)
Return of equity to noncontrolling interests	—	—			—	—			(349		)	(349		)
Contributions from noncontrolling interests	—	—			—	—			4,039			4,039
Net income (loss)	—	4			—	8,417			(89		)	8,332
Balance as of December 31, 2012	20,760	196			113,041,692	757,526			5,088			762,810
Issuance of units in exchange for contributions of gross equity offering proceeds	—	—			1,575,713	17,177			—			17,177
Offering costs and underwriters discount paid on behalf of the Trust	—	—			—	(492		)	—			(492		)
Vesting of restricted stock awards and restricted stock units	—	—			33,180	360			—			360
Amortization of restricted stock awards	—	—			68,810	1,337			—			1,337
Distributions	—	(9		)	—	(48,001		)	—			(48,010		)
Return of equity to noncontrolling interests	—	—			—	—			(795		)	(795		)
Contributions from noncontrolling interests	—	—			—	—			69			69
Purchase of noncontrolling interests	—	—			—	(6,693		)	(175		)	(6,868		)
Net income	—	3			—	4,320			58			4,381
Balance as of December 31, 2013	20,760	$	190		114,719,395	$	725,534		$	4,245		$	729,969

See accompanying notes to the consolidated financial statements.

5

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,

	2013			2012			2011
	(Amounts in thousands)
Operating activities:
Net income (loss)	$	4,631		$	8,637		$	(10,775	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	48,098			33,240			23,858
Depreciation included in discontinued operations	1,767			4,634			5,697
Deferred tax expense (benefit)	(260		)	1,043			(197		)
Loss on disposal of assets	12			99			22
Gain on sale of collegiate housing properties in discontinued operations	(3,913		)	(5,496		)	(2,388		)
Noncash rent expense related to the straight-line adjustment for long-term ground leases	5,255			4,364			4,208
Loss on impairment of collegiate housing properties included in discontinued operations	5,001			—			7,859
Loss on extinguishment of debt	—			—			351
Loss on extinguishment of debt included in discontinued operations	—			—			406
Amortization of deferred financing costs	1,758			1,215			1,197
Amortization of deferred financing costs included in discontinued operations	—			—			48
Loss on interest rate cap	—			—			5
Amortization of unamortized debt premiums	(776		)	(80		)	(390		)
Distributions of earnings from unconsolidated entities	71			195			264
Noncash compensation expense related to stock-based incentive awards	2,127			2,041			1,502
Equity in losses of unconsolidated entities	203			363			447
Change in operating assets and liabilities (net of acquisitions):
Student contracts receivable	(315		)	(19		)	(239		)
Management fees receivable	268			304			(406		)
Other assets	17,009			(9,009		)	(1,497		)
Accounts payable and accrued expenses	(8,846		)	5,721			1,451
Deferred revenue	5,317			4,142			2,614
Net cash provided by operating activities	77,407			51,394			34,037
Investing activities:
Property acquisitions, net of cash acquired	(109,482		)	(239,065		)	(156,463		)
Purchase of corporate furniture and fixtures	(787		)	(3,106		)	(173		)
Restricted cash	(5,843		)	(1,584		)	(35		)
Insurance proceeds received on property losses	16,860			3,900			—
Investment in collegiate housing properties	(17,183		)	(22,599		)	(22,129		)
Proceeds from sale of collegiate housing properties	40,256			67,261			73,821
Notes receivable	(125		)	—			—
Repayment on notes receivable	3,000			1,800			75
Loans to developments	—			(3,000		)	(8,128		)
Earnest money deposits	(125		)	(3,000		)	(75		)
Investment in assets under development	(215,409		)	(157,840		)	(46,966		)
Distributions from unconsolidated entities in excess of earnings	—			82			285
Investments in unconsolidated entities	(9,475		)	(11,797		)	(25		)
Net cash used in investing activities	(298,313		)	(368,948		)	(159,813		)

6

	2013			2012			2011
	(Amounts in thousands)
Financing activities:
Payment of mortgage and construction notes	(97,931		)	(79,185		)	(58,225		)
Borrowings under mortgage and construction loans	90,123			71,156			12,558
Debt issuance costs	(4,578		)	(1,026		)	(1,527		)
Debt extinguishment costs	—			—			(562		)
Borrowings on line of credit	302,033			141,000			—
Repayments of line of credit	(24,133		)	(62,000		)	(3,700		)
Proceeds from issuance of units in exchange for contributions	17,144			228,590			275,599
Payment of offering costs and underwriters discount on behalf of the Trust	(492		)	(8,954		)	(11,288		)
Purchase and return of equity to noncontrolling interests	(7,664		)	(349		)	—
Contributions from noncontrolling interests	1,197			4,039			—
Distributions paid on unvested restricted stock awards	(80		)	(61		)	(50		)
Distributions paid to unitholders	(47,930		)	(33,898		)	(17,672		)
Distributions paid to noncontrolling interests	(449		)	(532		)	(502		)
Repurchases of units and payments of restricted stock awards tax withholding	(1,300		)	—			—
Net cash provided by financing activities	225,940			258,780			194,631
Net (decrease) increase in cash and cash equivalents	5,034			(58,774		)	68,855
Cash and cash equivalents, beginning of period	17,039			75,813			6,958
Cash and cash equivalents, end of period	$	22,073		$	17,039		$	75,813
Supplemental disclosure of cash flow information:
Interest paid	$	23,060		$	18,402		$	19,526
Income taxes paid	$	542		$	76		$	339
Supplemental disclosure of noncash activities:
Redemption of redeemable limited partner units	$	—		$	606		$	—
Stock-based compensation	$	2,127		$	2,041		$	1,453
Capital expenditures in accounts payable and accrued expenses related to developments	$	15,425		$	20,028		$	7,049
Mortgage and construction loans assumed in connection with property acquisitions	$	32,420		$	48,451		$	36,930

See accompanying notes to the consolidated financial statements.

7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and description of business

Education Realty Operating Partnership, LP ("EROP", or the "Operating Partnership") is a Delaware limited partnership that was organized by Education Realty Trust, Inc. (the "Trust") to own and operate our business. The general partner of EROP is Education Realty OP GP, Inc. ("OP GP"), an entity that is wholly owned by the Trust. The limited partners of EROP are Education Realty OP Limited Partner Trust, a wholly owned subsidiary of the Trust, and other limited partners consisting of current and former members of management and non-affiliated third parties. The OP GP, as the sole general partner of the Operating Partnership, has the responsibility and discretion in the management and control of the Operating Partnership, and the limited partners of the Operating Partnership, in such capacity, have no authority to transact business for, or participate in the management activities of the Operating Partnership.

Interests in EROP are represented by Operating Partnership Units ("OP units"). The Operating Partnership's net income is allocated to the partners based on their respective percentage interests. Distributions are made in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of Education Realty Operating Partnership, LP (the "Operating Partnership Agreement"), on a per unit basis that is equal to the dividend per share on the Trust's common stock, which is publicly traded on the New York Stock Exchange ("NYSE") under the ticker symbol "EDR". Below is the legal structure of the Trust and Operating Partnership, as of December 31, 2013:

EROP owns, directly or indirectly, interests in collegiate housing communities located on or near major universities in the United States. EROP also provides real estate facility management, development and other advisory services through the following subsidiaries:

• EDR Management Inc. ("Management Company"), a Delaware corporation collegiate housing management activities; and

• EDR Development LLC ("Development Company"), a Delaware limited liability company providing development consulting services for third party collegiate housing communities.

8

EROP is subject to the risks involved with the ownership and operation of residential real estate near major universities throughout the United States. The risks include, among others, those associated with the changes in the demand for housing by the students at the related universities, competition for tenants, creditworthiness of tenants, changes in tax laws, interest rate levels, the availability of financing and potential liability under environmental and other laws.

2. Summary of significant accounting policies

Basis of presentation and principles of consolidation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States (“GAAP”). The accompanying consolidated financial statements of the Operating Partnership represent the assets and liabilities and operating results of the Operating Partnership and its majority owned subsidiaries.

All intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used by management in determining the recognition of third-party development consulting services revenue under the percentage of completion method, useful lives of collegiate housing assets, the valuation of goodwill, the initial valuations and underlying allocations of purchase price in connection with collegiate housing property acquisitions, the determination of fair value for impairment assessments and in the recording of the allowance for doubtful accounts. Actual results could differ from those estimates.

Cash and cash equivalents

All highly-liquid investments with a maturity of three months or less when purchased are considered cash equivalents. Restricted cash is excluded from cash for the purpose of preparing the consolidated statements of cash flows. The Operating Partnership maintains cash balances in various banks. At times, the amounts of cash may exceed the amount the Federal Deposit Insurance Corporation (“FDIC”) insures. As of December 31, 2013, the Operating Partnership had $12.0 million cash on deposit that was uninsured by the FDIC or in excess of the FDIC limits.

Restricted cash

Restricted cash includes escrow accounts held by lenders for the purpose of paying taxes, insurance, principal and interest and funding capital improvements.

Distributions

The Operating Partnership pays regular quarterly cash distributions to unitholders. These distributions are determined quarterly by the general partner and are generally equal to the dividend per share of the Trust’s common stock. The dividends at the Trust level are determined quarterly by the Board of Directors (“Board”) of the Trust.

9

Notes receivable

On August 26, 2013, EROP provided a $0.5 million promissory loan to College Park Apartments, Inc. ("CPA"), EROP's partner in the unconsolidated joint venture University Village-Greensboro LLC (see Note 8), at an interest rate of 10% per annum and a maturity date of August 1, 2020. Under the loan, CPA can make one draw per calendar quarter and has borrowed $0.1 million as of December 31, 2013. The loan is secured by CPA's interest in the joint venture.

During the year ended December 31, 2012, EROP entered into a mezzanine loan and purchase option agreement with Landmark Properties Holdings, LLC ("Landmark") for the purpose of developing a cottage-style collegiate housing community at Pennsylvania State University in State College, Pennsylvania. A construction loan was used to fund 80% of the development, and once completed, the community will be wholly owned by Landmark. EROP provided $3.0 million of mezzanine financing at an interest rate of 10% per annum and was granted an option to purchase the community in 2013, 2014 or 2015. As described in Note 5, in September 2013, EROP exercised the purchase option and acquired the collegiate housing community known as The Retreat at State College. The mezzanine loan was secured by 100% of Landmark's equity interest in this development and Landmark's equity interest in the joint venture in the collegiate housing property near The University of Mississippi campus and was repaid during closing of the acquisition. As of December 31, 2012, the mezzanine financing had a balance of $3.0 million and was recorded in notes receivable in the accompanying consolidated balance sheet.

On July 14, 2010, EROP entered into definitive agreements for the development, financing and management of a $60.7 million, 20-story, 572-bed graduate collegiate housing complex at the Science + Technology Park at Johns Hopkins Medical Institute. EROP developed and manages the building, which was constructed on land owned by Johns Hopkins University and leased to a subsidiary of East Baltimore Development, Inc., a nonprofit partnership of private and public entities dedicated to Baltimore’s urban revitalization. Under terms of the agreements, EROP (a) received development and construction oversight fees and reimbursement of pre-development expenses, (b) invested in the form of an $18.0 million second mortgage, (c) will earn a $3.0 million fee for providing a repayment guarantee of the construction first mortgage and (d) received a 10-year management contract. As of December 31, 2013 and 2012, the note receivable for the second mortgage had a balance of $18.0 million and is recorded in notes receivable in the accompanying consolidated balance sheets. EROP does not have an ownership interest in any form that would require consolidation. Due to its financing commitments to the project along with other factors, EROP will not recognize the development services revenue, guarantee fee revenue and interest income earned on the second mortgage until the second mortgage is repaid, and EROP no longer has a substantial continuing financial involvement. If the construction loan and second mortgage had been repaid prior to December 31, 2013, EROP would have recognized development services revenue net of costs of $2.6 million (including participation in cost savings of $0.8 million), guarantee fee revenue of $3.0 million and interest income of $5.6 million since the commencement of the project. See Note 18 regarding subsequent events.

Collegiate housing properties

Land, land improvements, buildings and improvements, and furniture, fixtures and equipment are recorded at cost. Buildings and improvements are depreciated over 15 to 40 years, land improvements are depreciated over 15 years and furniture, fixtures, and equipment are depreciated over 3 to 7 years. Depreciation is computed using the straight-line method for financial reporting purposes over the estimated useful life.

Acquired collegiate housing communities’ results of operations are included in EROP’s results of operations from the respective dates of acquisition. Appraisals, estimates of cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, land improvements, buildings and improvements, furniture, fixtures and equipment and identifiable intangibles such as amounts related to in-place leases. Acquisition costs are expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations.

Management assesses impairment of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management uses an estimate of future undiscounted cash flows of the related asset based on its intended use to determine whether the carrying value is recoverable. If EROP determines that the carrying value of an asset is not recoverable, the fair value of the asset is estimated and an impairment loss is recorded to the extent the carrying value exceeds estimated fair value. Management estimates fair value using

10

discounted cash flow models, market appraisals if available, and other market participant data.

When a collegiate housing property has met the criteria to be classified as held for sale, the fair value less cost to sell such asset is estimated. If the fair value less cost to sell the asset is less than the carrying amount of the asset, an impairment charge is recorded for the estimated loss. Depreciation expense is no longer recorded once a collegiate housing property has met the held for sale criteria. Operations of collegiate housing properties that are sold or classified as held for sale are recorded as part of discontinued operations for all periods presented. During the years ended December 31, 2013, 2012 and 2011, 12 properties were classified as part of discontinued operations in the accompanying consolidated statements of operations for all periods presented. All 12 of these properties were sold by December 31, 2013 (see Note 5).

Deferred financing costs

Deferred financing costs represent costs incurred in connection with acquiring debt facilities. The deferred financing costs incurred for years ended December 31, 2013, 2012 and 2011 were $4.6 million, $0.9 million and $1.7 million, respectively, and are being amortized over the terms of the related debt using a method that approximates the effective interest method. Amortization expense totaled $1.8 million, $1.2 million, and $1.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013 and 2012, accumulated amortization totaled $7.0 million and $5.7 million, respectively. Deferred financing costs, net of amortization, are included in other assets in the accompanying consolidated balance sheets (see Note 7).

Common stock issued by the Trust and related offering costs

The Trust is structured as an umbrella partnership REIT ("UPREIT") and contributes all proceeds from its various equity offerings to EROP. In return for those contributions, the Trust (through Education Realty OP Limited Partner Trust) receives OP units equal to the number of shares of common stock the Trust issued in the equity offering. As stipulated in the Operating Partnership Agreement, proceeds from equity offerings are deemed to be contributed to the Operating Partnership at the gross amount with EROP incurring expenses related to the underwriters commission and other offering costs. Accordingly, proceeds from common stock issuances contributed to EROP in exchange for OP Units are presented gross on the condensed consolidated statement of cash flows and in the condensed consolidated statement of changes in partners' capital and noncontrolling interest. They payment of offering costs by EROP on behalf of the Trust is considered a distribution.

On August 14, 2012, the Trust completed a follow-on offering of 17.3 million shares of its common stock, which included 2.3 million shares purchased by the underwriters pursuant to an option to purchase additional shares. The Trust received approximately $180.9 million in net proceeds from the offering after deducting the underwriting discount and other offering expenses. The Trust contributed the proceeds to EROP in exchange for units and EROP used the net proceeds to repay the unsecured revolving credit facility (see Note 10) and to fund the acquisition of The Province at East Carolina University, The District on 5th serving the University of Arizona, Campus Village serving Michigan State University, The Province at Kent State serving Kent State University and The Suites at Overton Park and The Centre at Overton Park both serving Texas Tech University (see Note 4).

On September 20, 2011, the Trust entered into the 2011 equity distribution agreement. Pursuant to the terms and conditions of the agreements, the Trust could issue and sell shares of its common stock having an aggregate offering amount of up to $50 million. As of December 31, 2012, the Trust had sold 4.8 million shares of common stock under the 2011 equity distribution program for net proceeds of approximately $49.2 million and reached the aggregate offering amount of $50 million. On May 22, 2012, the Trust entered into two additional equity distribution agreements similar to the previous agreement discussed above. Under the 2012 agreements, the Trust could issue and sell shares of its common stock having an aggregate offering amount of $50 million. As of December 31, 2013, the Trust had sold 1.6 million shares of common stock under the 2012 agreements for net proceeds of approximately $17.8 million. The Trust contributed the proceeds to EROP and EROP used the net proceeds to repay debt, fund its development pipeline, fund acquisitions and for general corporate purposes. See Note 18 regarding subsequent events pertaining to equity offerings.

On May 19, 2010, the Trust’s stockholders approved the Education Realty Trust, Inc. Employee Stock Purchase Plan (the “ESPP”) which became effective on July 1, 2010. Pursuant to the ESPP, all employees of EROP are eligible to make periodic purchases of the Trust's common stock through payroll deductions. Subject to the discretion of the compensation committee

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of the Board, the purchase price per share of common stock purchased by employees under the ESPP is 85% of the fair market value on the applicable purchase date. The Trust reserved 300,000 shares of common stock for sale under the ESPP. The aggregate cost of the ESPP (generally the 15% discount on the shares purchased) is recorded by EROP as a period expense as the employees receiving the benefit are employees of EROP. For the years ended December 31, 2013, 2012 and 2011, total compensation expense relating to the ESPP was $31.2 thousand, $25.3 thousand, and $24.3 thousand, respectively.

Debt premiums

Differences between the estimated fair value of debt and the principal value of debt assumed in connection with collegiate housing property acquisitions are amortized over the term of the related debt as an offset to interest expense using the effective interest method. As of December 31, 2013 and 2012, EROP had net unamortized debt premiums of $2.3 million and $3.1 million, respectively. These amounts are included in mortgage and construction loans in the accompanying consolidated balance sheets.

Income taxes

The Trust qualifies as a REIT under the Code and is generally not subject to federal, state and local income taxes on any of its taxable income that it distributes if it distributes at least 90% of its REIT taxable income for each tax year to its stockholders and meets certain other requirements. If the Trust fails to qualify as a REIT for any taxable year, the Trust will be subject to federal, state and local income taxes (including any applicable alternative minimum tax) on its taxable income. EROP is bound by the terms of the Amended and Restated Agreement of Limited Partnership to ensure that the Trust continues to qualify as a REIT.

The Operating Partnership is generally not liable for federal corporate income taxes as income or loss is reported in the tax returns of its partners. EROP has elected, however, to treat certain subsidiaries, including the Management Company, as taxable REIT subsidiaries, which are taxed as C Corporations for federal, state and local income taxes. The Management Company provides management services, and through the Development Company, provides development services to properties owned by EROP as well as third-parties. Deferred tax assets and liabilities are recognized based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect in the years in which those temporary differences are expected to reverse.

EROP had no unrecognized tax benefits as of December 31, 2013, 2012 and 2011. As of December 31, 2013, EROP did not expect to record any unrecognized tax benefits. EROP, and its subsidiaries, file federal and state income tax returns. As of December 31, 2013, open tax years generally included tax years for 2010, 2011, and 2012. EROP’s policy is to include interest and penalties related to unrecognized tax benefits in general and administrative expenses. As of December 31, 2013, 2012 and 2011, EROP had no interest or penalties recorded related to unrecognized tax benefits.

Noncontrolling interests

As of December 31, 2013, EROP had entered into three joint venture agreements to develop, own and manage properties near Arizona State University - Downtown Phoenix (Roosevelt Point), The University of Mississippi (The Retreat at Oxford) and Duke University (605 West). EROP is deemed to be the primary beneficiary of these communities; therefore, EROP accounts for the joint ventures using the consolidation method of accounting. EROP's joint venture partners' investments in 605 West met the requirements to be classified outside of permanent equity and is therefore classified as redeemable noncontrolling interests in the accompanying consolidated balance sheets and net income attributable to noncontrolling interest in the accompanying consolidated statement of operations due to the partner's ability to put their ownership interests to EROP as stipulated in the operating agreements. EROP's joint venture partners’ investments in the Arizona State University - Downtown Phoenix joint venture and The University of Mississippi joint ventures are accounted for as noncontrolling interests in the accompanying consolidated balance sheets and statements of changes in partners' capital and noncontrolling interests and net income attributable to noncontrolling interests in the accompanying consolidated statements of operations.

The units of the limited partnership of University Towers Operating Partnership, LP (“University Towers Operating

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Partnership Units”) and profits interest units (“PIUs”) (see Note 9) are referred to as noncontrolling interests. EROP follows the guidance issued by the Financial Accounting Standards Board (“FASB”) regarding the classification and measurement of redeemable securities. The University Towers Operating Partnership Units are redeemable at the option of the holder and they participate in net income and distributions. Accordingly, EROP has determined that the University Towers Operating Partnership Units meet the requirements to be classified outside of permanent equity and are therefore also classified as redeemable noncontrolling interests in the accompanying consolidated balance sheets and net income attributable to noncontrolling interests in the accompanying consolidated statements of operations.

The value of redeemable noncontrolling interests is reported at the greater of fair value or historical cost at the end of each reporting period. As of December 31, 2013, EROP reported the redeemable noncontrolling interests at historical cost, which was greater than fair value.

Below is a table summarizing the activity of redeemable noncontrolling interests for the years ended December 31, 2013 and 2012 (in thousands):

Balance, December 31, 2011	$	1,151
Net income	181
Distributions	(168		)
Balance, December 31, 2012	$	1,164
Net income	168
Contributions from redeemable noncontrolling interests	1,127
Distributions	(100		)
Balance, December 31, 2013	$	2,359

Redeemable Limited Partner Units

EROP classifies the portion of OP units that EROP is required, either by contract or securities law, to deliver registered shares of common stock of the Trust or cash, at the general partner's discretion, to the exchanging OP unitholder as redeemable limited partner units in the mezzanine section of the accompanying consolidated balance sheets. The redeemable limited partner units are reported at the greater of fair value or historical cost at the end of each reporting period. As of December 31, 2013, EROP reported the redeemable limited partner units at historical cost, which was greater than fair value. During the year ended December 31, 2012, 43,832 Operating Partnership Units were redeemed for 43,832 shares of common stock of the Trust.

Below is a table summarizing the activity of redeemable limited partners' capital for the years ended December 31, 2013 and 2012 (in thousands):

Balance, December 31, 2011	$	8,625
Net income	124
Distributions	(362		)
Conversion of redeemable limited partner units into shares of EDR common stock	(607		)
Balance, December 31, 2012	$	7,780
Net income	81
Distributions	(349		)
Balance, December 31, 2013	$	7,512

The value of redeemable limited partner units is reported at the greater of fair value or historical cost at the end of each reporting period. As of December 31, 2013, EROP reported the redeemable limited partner units at historical cost, which was greater than fair value.

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Earnings per unit

Basic earnings per unit is calculated by dividing net earnings available to unitholders by the weighted average number of units outstanding. Diluted earnings per unit is calculated similarly, except that it includes the dilutive effect of the assumed exercise of potentially dilutive securities. EROP follows the authoritative guidance regarding the determination of whether certain instruments are participating securities.

The following is a summary of the elements used in calculating basic and diluted earnings per unit:

	2013			2012			2011
Numerator - basic and diluted earnings per unit (in thousands):
Income (loss) from continuing operations	$	5,087		$	217		$	(6,607	)
Income from continuing operations attributable to noncontrolling interests	(227		)	(92		)	(188		)
Income (loss) from continuing operations attributable to unitholders	4,860			125			(6,795		)
Income (loss) from discontinued operations	(456		)	8,420			(4,168		)
Net income (loss) attributable to unitholders	$	4,404		$	8,545		$	(10,963	)

	2013	2012	2011
Denominator:
Weighted average units outstanding	114,431,996	101,243,974	75,485,418
Redeemable OP units	830,343	865,727	903,738
Weighted average units outstanding - basic	115,262,339	102,109,701	76,389,156
Redeemable noncontrolling units	207,257	207,257	—
Weighted average units outstanding - diluted	115,469,596	102,316,958	76,389,156

For the year ended December 31, 2011, the following potentially dilutive securities were outstanding but were not included in the computation of diluted earnings per unit because the effects of their inclusion would be anti-dilutive:

	2011
University Towers Operating Partnership Units	207,257

Repairs, maintenance and major improvements

The costs of ordinary repairs and maintenance are charged to operations when incurred. Major improvements that extend the life of an asset are capitalized and depreciated over the remaining useful life of the asset. Planned major repair, maintenance and improvement projects are capitalized when performed. In some circumstances, the lenders require EROP to maintain a reserve account for future repairs and capital expenditures. These amounts are classified as restricted cash in the accompanying consolidated balance sheets as the funds are not available for use.

Goodwill and other intangible assets

Goodwill is tested annually for impairment as of December 31, and is tested for impairment more frequently if events and circumstances indicate that the assets might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The accumulated impairment loss recorded by EROP as of December 31, 2008 was $0.4 million. No additional impairment has been recorded through December 31, 2013. The carrying value of goodwill was $3.1 million as of December 31, 2013 and 2012, of which $2.1 million was recorded on the management services segment and $0.9 million was recorded on the development consulting services segment. Goodwill is not subject to amortization.

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Other intangible assets generally include in-place leases acquired in connection with acquisitions and are amortized over the estimated life of the lease/contract term. The carrying value of other intangible assets was $0.8 million and $1.4 million as of December 31, 2013 and 2012, respectively.

Investment in unconsolidated entities

EROP accounts for its investments in unconsolidated joint ventures using the equity method whereby the costs of an investment are adjusted for EROP’s share of earnings of the respective investment reduced by distributions received. The earnings and distributions of the unconsolidated joint ventures are allocated based on each owner’s respective ownership interests. These investments are classified as other assets or accrued expenses, depending on whether the distributions exceed EROP’s contributions and share of earnings in the joint ventures, in the accompanying consolidated balance sheets (see Note 8). As of December 31, 2013, EROP had investments in the following unconsolidated joint ventures that are accounted for under the equity method:

• 1313 5th Street MN Holdings, LLC, a Delaware limited liability company, 50% owned by the Operating Partnership;

• West Clayton Athens GA Owner, LLC, a Delaware limited liability company, 50% owned by the Operating Partnership;

• Elauwit Networks, a South Carolina limited liability company, 10% owned by the Operating Partnership; and

• University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by the Operating Partnership.

As of December 31, 2012, EROP had investments in the following unconsolidated joint ventures that are accounted for under the equity method:

• 1313 5th Street MN Holdings, LLC, a Delaware limited liability company, 50% owned by the Operating Partnership;

• Elauwit Networks, a South Carolina limited liability company, 10% owned by the Operating Partnership; and

• University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by the Operating Partnership.

Comprehensive income

EROP follows the authoritative guidance issued by the FASB relating to the reporting and display of comprehensive income and its components. For all periods presented, comprehensive income (loss) is equal to net income (loss).

Revenue recognition

EROP recognizes revenue related to leasing activities at the collegiate housing communities owned by EROP, management fees related to managing third-party collegiate housing communities, development consulting fees related to the general oversight of third-party collegiate housing development and operating expense reimbursements for payroll and related expenses incurred for third-party collegiate housing communities managed by EROP.

Collegiate housing leasing revenue — Collegiate housing leasing revenue is comprised of all activities related to leasing and operating the collegiate housing communities and includes revenues from leasing apartments by the bed, food services, parking lot rentals and providing certain ancillary services. This revenue is reflected in collegiate housing leasing revenue in the accompanying consolidated statements of operations. Students are required to execute lease contracts with payment schedules that vary from semester to monthly payments. Generally, EROP requires each executed leasing contract to be accompanied by a signed parental guarantee. Receivables are recorded when billed. Revenues and related lease incentives and nonrefundable application and service fees are recognized on a straight-line basis over the term of the contracts. At certain collegiate housing facilities, EROP offers parking lot rentals to the tenants. The related revenues are recognized on a straight-line basis over the term of the related agreement.

Due to the nature of EROP’s business, accounts receivable result primarily from monthly billings of student rents. Payments are normally received within 30 days. Balances are considered past due when payment is not received on the contractual due date. Allowances for uncollectible accounts are established by management when it is determined that collection is doubtful. Such allowances are reviewed periodically based upon experience.

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The following table reconciles the allowance for doubtful accounts as of and for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013			2012			2011
Balance, beginning of period	$	142		$	133		$	129
Provision for uncollectible accounts	1,379			1,128			1,079
Deductions	(1,425		)	(1,119		)	(1,075		)
Balance, end of period	$	96		$	142		$	133

Third-party development services revenue — EROP provides development consulting services in an agency capacity with third parties whereby the fee is determined based upon the total construction costs. Total fees vary from 3 – 5% of the total estimated costs, and EROP typically receives a portion of the fees up front. These fees, including the up-front fee, are recognized using the percentage of completion method in proportion to the contract costs incurred by the owner over the course of construction of the respective projects. Occasionally, the development consulting contracts include a provision whereby EROP can participate in project savings resulting from successful cost management efforts. These revenues are recognized once all contractual terms have been satisfied and no future performance requirements exist. This typically occurs after construction is complete. For the years ended December 31, 2013, 2012 and 2011, there was $0.8 million, $0.2 million and $0.5 million of revenue recognized, respectively, related to cost savings agreements on development projects. For 2013 and 2012, this amount of participation in cost savings was attributable to the participating development at the Johns Hopkins Medical Institute.

Third-party management services revenue — EROP enters into management contracts to manage third-party collegiate housing communities. Management revenues are recognized when earned in accordance with each management contract. Incentive management fees are recognized when the incentive criteria have been met.

Operating expense reimbursements — EROP pays certain payroll and related costs to operate third-party collegiate housing communities that are managed by EROP. Under the terms of the related management agreements, the third-party property owners reimburse these costs. The amounts billed to the third-party owners are recognized as revenue.

Costs related to development consulting services

Costs associated with the pursuit of third-party development consulting contracts are expensed as incurred, until such time that management has been notified of a contract award. At such time, the reimbursable costs are recorded as receivables and are reflected as other assets in the accompanying consolidated balance sheets (see Note 7).

Costs directly associated with internal development projects are capitalized as part of the cost of the project.

Advertising expense

Advertising expenses are charged to income during the period incurred. EROP does not use direct response advertising. Advertising expense was $4.6 million, $3.2 million and $2.5 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Segment information

EROP discloses certain operating and financial data with respect to separate business activities within its enterprise. EROP has identified three reportable business segments: collegiate housing leasing, collegiate housing development consulting services and collegiate housing management services.

Stock-based compensation

On May 4, 2011, the Trust’s stockholders approved the Education Realty Trust, Inc. 2011 Omnibus Equity Incentive Plan (the “2011 Plan”). The 2011 Plan replaced the Education Realty Trust, Inc. 2004 Incentive Plan (“2004 Plan”) in its entirety. The

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2011 Plan is described more fully in Note 9. EROP recognizes compensation costs related to share-based payments in the accompanying consolidated financial statements in accordance with authoritative guidance. This requires compensation costs to be recognized in the financial statements of a subsidiary to ensure the user of the financial statements understands all of the subsidiary's cost of doing business. Although the 2011 Plan was established by the Trust, the intent was to provide incentive to the management employees of EROP and therefore the related compensation costs have been reflected in the accompanying consolidated statements of operations and were treated as capital contributions in the accompanying consolidated statement of changes in partners' capital and noncontrolling interests.

Fair value measurements

EROP follows the guidance contained in FASB ASC 820, Fair Value Measurements and Disclosures. Fair value is generally defined as the exit price at which an asset or liability could be exchanged in a current transaction between willing unrelated parties, other than in a forced liquidation or sale. The guidance establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data, and requires disclosures for assets and liabilities measured at fair value based on their level in the hierarchy.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level1 - Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 - Observable inputs other than those included in Level 1, for example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

• Level 3 - Unobservable inputs reflecting management's own assumption about the inputs used in pricing the asset or liability at the measurement date.

Non-financial assets measured at fair value on a nonrecurring basis consist of real estate assets and investments in partially owned entities that have been written-down to estimated fair value when it has been determined that asset values are not recoverable. The fair values of these assets are determined using discounted cash flow models, market appraisals if available, and other market participant data. Note 6 provides details for the impairment charges recorded during the year ended December 31, 2013. Non-financial assets impaired during the year ended December 31, 2013 were disposed of during the year they were written down to estimated fair value. No non-financial assets were written down during the year ended December 31, 2012.

Financial assets and liabilities that are not measured at fair value in our consolidated financial statements include mezzanine notes receivable and debt. Estimates of the fair values of these instruments are based on our assessments of available market information and valuation methodologies, including discounted cash flow analyses.

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The table below summarizes the carrying amounts and fair values of these financial instruments as of December 31, 2013 and 2012 (in thousands):

	As of December 31, 2013
			Estimated Fair Value
	Carrying value		Level 1		Level 2		Level 3
Mezzanine notes receivable	$	18,125	$	—	$	19,330	$	—
Unsecured revolving credit facility	356,900		—		356,900		—
Variable rate mortgage and construction loans	193,381		—		193,381		—
Fixed rate mortgage and construction loans	227,009		—		239,162		—

	As of December 31, 2012
			Estimated Fair Value
	Carrying value		Level 1		Level 2		Level 3
Mezzanine notes receivable	$	21,000	$	—	$	23,772	$	—
Unsecured revolving credit facility	79,000		—		79,000		—
Variable rate mortgage and construction loans	125,436		—		125,436		—
Fixed rate mortgage and construction loans	270,342		—		290,409		—

EROP discloses the fair value of financial instruments for which it is practicable to estimate. EROP does not hold or issue financial instruments for trading purposes. EROP considers the carrying amounts of cash and cash equivalents, restricted cash, student contracts receivable, accounts payable and accrued expenses to approximate fair value due to the short maturity of these instruments. The carrying value of restricted cash approximates its fair value based on the nature of our assessment of the ability to recover these amounts. Due to the short-term nature of these investments, Level 1 and Level 2 inputs are utilized to estimate the fair value of these financial instruments.

Recent accounting pronouncements

In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)" ("ASU 2014-15"). ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. EROP does not expect ASU 2014-15 to have a material impact on EROP's consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"). The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including the guidance on real estate derecognition for most transactions. ASU 2014-09 provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years and permits the use of either the retrospective or cumulative effect transition method. EROP is currently evaluating the provisions of this guidance.

In April 2014, the FASB ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an

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Entity" ("ASU 2014-08"). ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted but only for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. EROP adopted ASU 2014-08 as of January 1, 2014.

In February 2013, the FASB updated the guidance related to Liabilities to provide guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. The updated guidance requires the entity to measure these obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The updated guidance also requires an entity to disclose the nature and amount of the obligation as well as other information. The guidance is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2013. The adoption is not expected to have a material impact on EROP's consolidated financial statements.

In December 2011, the FASB updated the guidance related to Property, Plant and Equipment – Real Estate Sales to eliminate diversity in practice regarding whether in-substance real estate should be derecognized when the parent ceases to have a controlling financial interest in a subsidiary that is in-substance real estate because of a default of the subsidiary on its nonrecourse debt. The updated guidance clarifies that the accounting for such transactions is based on substance rather than form, and a reporting entity generally would not satisfy the requirements to derecognize the in-substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse debt. The guidance is effective for financial statements issued for fiscal years and interim periods beginning after June 15, 2012. The adoption had no material impact on EROP’s consolidated financial statements.

3. Income taxes

Deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities of the taxable REIT subsidiaries ("TRSs") for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities as of December 31, 2013 and 2012, respectively, are as follows (in thousands):

	2013			2012
Deferred tax assets:
Deferred revenue	$	1,022		$	717
Accrued expenses	252			159
Straight line rent	366			69
Restricted stock amortization	85			—
Net operating loss carryforward	418			—
Total deferred tax assets	2,143			945
Deferred tax liabilities:
Depreciation and amortization	(634		)	(493		)
Restricted stock amortization	—			(63		)
Total deferred tax liabilities	(634		)	(556		)
Net deferred tax assets	$	1,509		$	389

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Significant components of income tax expense (benefit) for the years ended December 31, 2013, 2012 and 2011, respectively, are as follows (in thousands):

	2013			2012			2011
Deferred:
Federal	$	(296	)	$	895		$	(169	)
State	36			148			(28		)
Deferred expense (benefit)	(260		)	1,043			(197		)
Current:
Federal	312			(1,326		)	(199		)
State	151			(601		)	301
Current (benefit) expense	463			(1,927		)	102
Total expense (benefit)	$	203		$	(884	)	$	(95	)

TRS losses subject to tax consisted of $0.2 million, $1.9 million and $0.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. The reconciliation of income tax attributable to income before noncontrolling interests computed at the U.S. statutory rate to income tax provision is as follows (in thousands):

	2013		2012			2011
Tax provision at U.S. statutory rates on TRS income subject to tax	$	15	$	(566	)	$	(293	)
State income tax, net of federal benefit	126		(312		)	319
Other	62		(6		)	(121		)
Tax expense (benefit)	$	203	$	(884	)	$	(95	)

4. Acquisition and development of real estate investments

During the year ended December 31, 2013, EROP completed the following three collegiate housing property acquisitions:

Name	Primary University Served	Acquisition Date	# of Beds	# of Units	Contract Price (in thousands)
The Cottages on Lindberg	Purdue University West Lafayette, Indiana	Aug 2013	745	193	$36,000
The Retreat at State College	Pennsylvania State University State College, Pennsylvania	Sept 2013	587	138	$56,189
The Varsity	University of Michigan Ann Arbor, Michigan	Dec 2013	415	181	$53,950

Combined acquisition costs for these purchases were $0.4 million and are included in general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2013. EROP funded these acquisitions with assumed debt of $32.4 million and proceeds from draws on the Trust's Fourth Amended Revolver (as defined below). A summary follows of the fair values of the assets acquired and the liabilities assumed as of the dates of the acquisitions (in thousands):

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	The Cottages on Lindberg			The Retreat at State College			The Varsity			Total
Collegiate housing properties	$	35,704		$	55,812		$	53,630		$	145,146
Other assets	347			442			481			1,270
Current liabilities	(689		)	(405		)	(449		)	(1,543		)
Mortgage debt	—			—			(32,420		)	(32,420		)
Total net assets acquired	$	35,362		$	55,849		$	21,242		$	112,453

The difference between the collegiate housing property acquisition contract prices of $146.1 million and the total net assets acquired of $112.5 million is $1.2 million of net assets purchased or liabilities assumed and $32.4 million of assumed debt (see Note 10). In the accompanying consolidated statements of cash flows, we have excluded from cash outflows for the 2013 acquisitions $3.0 million of cash paid as a deposit for The Varsity acquisition during 2012.

The amounts of the 2013 acquisitions’ revenue and net income included in EROP’s accompanying consolidated statement of operations for the year ended December 31, 2013, and the unaudited pro forma revenue and net income had the acquisition date been January 1, 2012, are as follows:

	Revenue		Net income		Net income attributable to unitholders per unit - basic and diluted
	(in thousands)
Actual from date of acquisition – 12/31/13	$	3,221	$	911	$	0.01
2013 supplemental pro forma for 1/1/13 – 12/31/13(1)	$	187,961	$	4,841	$	0.04
2012 supplemental pro forma for 1/1/12 – 12/31/12(1)	$	139,714	$	9,229	$	0.09

(1) Supplemental pro forma earnings for the year ended December 31, 2013 were adjusted to exclude $0.4 million of acquisition-related costs incurred in 2013. Supplemental pro forma earnings for the year ended December 31, 2012 were adjusted to include these charges. As The Retreat at State College and The Varsity opened for the 2013/2014 lease year, the supplemental pro forma revenue and net income for the periods above do not include full years of operations for these acquisitions.

During the year ended December 31, 2012, EROP completed the following seven collegiate housing property acquisitions:

Name	Primary University Served	Acquisition Date	# of Beds	# of Units	Contract Price (in thousands)
The Reserve on Stinson (1)	University of Oklahoma Norman, Oklahoma	Jan 2012	612	204	$	22,954
The Province	East Carolina University Greenville, North Carolina	Sept 2012	728	235	$	50,000
The District on 5th	University of Arizona Tucson, Arizona	Oct 2012	764	208	$	66,442
Campus Village (2)	Michigan State University East Lansing, Michigan	Oct 2012	355	106	$	20,900
The Province	Kent State University Kent, Ohio	Nov 2012	596	246	$	45,000
The Suites at Overton Park	Texas Tech University Lubbock, Texas	Dec 2012	465	298	$	37,000
The Centre at Overton Park	Texas Tech University Lubbock, Texas	Dec 2012	400	278	$	37,000

(1) EROP had a 10% equity investment in the entity that previously owned The Reserve on Stinson collegiate housing community and also managed the property prior to the acquisition.

(2) EROP entered into a 32-year ground lease, with the option to extend the lease 20 additional years subject to certain conditions, which requires an increase in annual rent expense to be determined on predetermined adjustment dates based on the consumer price index for the life of the lease.

21

Combined acquisition costs for these purchases were $1.1 million and are included in general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2012. EROP funded these acquisitions with assumed debt of $48.5 million and existing cash, including cash proceeds generated by the August 2012 equity offering (see Note 2) and sales of collegiate housing properties (see Note 5). A summary follows of the fair values of the assets acquired and the liabilities assumed as of the dates of the acquisitions (in thousands):

	The Province at East Carolina			The District on 5th			The Suites and Centre at Overton Park			Other			Total
Collegiate housing properties	$	49,609		$	65,997		$	76,678		$	88,129		$	280,413
Other assets	502			475			4,830			971			6,778
Current liabilities	(531		)	(545		)	(1,651		)	(1,356		)	(4,083		)
Mortgage debt	—			—			(51,625		)	—			(51,625		)
Total net assets acquired	$	49,580		$	65,927		$	28,232		$	87,744		$	231,483

The difference between the collegiate housing property acquisition contract prices of $279.3 million and the total net assets acquired of $231.5 million is $48.5 million of debt assumed in connection with the acquisition of the Suites at Overton Park and the Centre at Overton Park collegiate housing properties (see Note 4) and $0.7 million of net assets purchased or liabilities assumed in addition to fixed assets and debt.

The amounts of the 2012 acquisitions' revenue and net income included in EROP's accompanying consolidated statement of operations for the year ended December 31, 2012, and the unaudited pro forma revenue and net income (loss) had the acquisition date been January 1, 2011, are as follows:

	Revenue		Net income (loss)			Net income (loss) attributable to unitholders per unit - basic and diluted
	(in thousands)
Actual from date of acquisition – 12/31/12	$	7,830	$	1,549		$	0.02
2012 supplemental pro forma for 1/1/12 – 12/31/12(1)	$	150,370	$	10,568		$	0.10
2011 supplemental pro forma for 1/1/11 – 12/31/11(1)	$	119,456	$	(12,490	)	$	(0.17	)

(1) Supplemental pro forma earnings for the year ended December 31, 2012 were adjusted to exclude $1.1 million of acquisition-related costs incurred in 2012. Supplemental pro forma earnings for the year ended December 31, 2011 were adjusted to include these charges.

Also in 2012, EROP purchased the land and parking garage associated with the University Towers residence hall for $7.5 million and simultaneously terminated the ground lease.

In September 2013, EROP purchased our joint venture partner's 10% non-controlling interest in the collegiate housing community referred to as East Edge located near the University of Alabama for $6.9 million in cash. EROP now owns 100% of the community. EROP funded this acquisition by borrowing on the Fourth Amended Revolver and existing cash.

In March 2013, EROP announced an agreement with Javelin 19 Investments, LLC ("Javelin 19") to develop, own and manage a new collegiate housing community near Duke University. EROP is the majority owner and managing member of the joint venture and will manage the community once completed. As of December 31, 2013, EROP and Javelin 19 had incurred $21.5 million in costs for the project. During the year ended December 31, 2013, EROP capitalized interest costs of $0.3 million and capitalized internal development project costs of approximately $0.1 million. The community opened in the summer of 2014. For a period of five years from the date on which the property receives its initial certificate of occupancy, Javelin 19 has the right to require EROP to purchase Javelin 19’s 10% interest in the partnership at a price to be determined.

In July 2012, the 3949 collegiate housing community at Saint Louis University was damaged by fire. As of December 31, 2013, EROP had incurred $22.7 million in costs to rebuild the community. During the years ended December 31, 2013 and

22

2012, EROP capitalized internal development costs of $32,152 and $1,936, respectively. The community reopened in August 2013. See Note 18 regarding subsequent events related to the settlement of the insurance claim related to the fire.

In March 2012, the financing was finalized for the agreement executed in June 2011 between EROP and Summa West, LLC to develop, own and manage a new collegiate housing community near Arizona State University-Downtown Phoenix campus (Roosevelt Point). EROP is the majority owner and managing member of the joint venture and manages the community now that it is completed. As of December 31, 2013, EROP and Summa West, LLC had incurred $51.1 million in costs for the project. During the years ended December 31, 2013 and 2012, capitalized interest costs of approximately $0.7 million and $0.5 million, respectively, and capitalized internal development project costs of approximately $0.1 million and $0.1 million, respectively, were incurred related to the development. The community opened in August 2013.

In January 2012, EROP entered into a joint venture agreement with Landmark Properties to develop, own and manage a new cottage-style collegiate housing community near the University of Mississippi campus (The Retreat at Oxford). EROP is the majority owner and managing member of the joint venture and manages the community since its completion. As of December 31, 2013, EROP and Landmark Properties had incurred $36.0 million in costs for the project. During the years ended December 31, 2013 and 2012, capitalized interest costs of approximately $0.4 million and $0.3 million, respectively, and capitalized internal development project costs of approximately $49,196 and $0.1 million, respectively, were incurred related to the development. The community opened in August 2013. See Note 18 regarding subsequent events.

In December 2011, EROP was selected by the University of Kentucky to develop, own and manage new collegiate housing on its campus. This project will be financed through EROP’s On-Campus Equity Plan, or the ONE Plan ^SM. As of December 31, 2013, EROP had incurred $106.8 million in costs for the 2013, 2014, 2015, and 2016 deliveries. Phase I opened in August 2013, Phase II opened in the summer of 2014, Phase II-B is expected to open in the summer of 2015, and the 2016 deliveries are expected to open in the summer of 2016. During the years ended December 31, 2013 and 2012, EROP capitalized interest costs of $1.5 million and $0.2 million, respectively, and internal development costs of $0.7 million and $0.3 million, respectively, related to the development.

In November 2011, EROP purchased a collegiate housing community near the University of Colorado, Boulder (The Lotus). EROP is developing additional housing on the existing land, which opened in the summer of 2014. As of December 31, 2013, EROP had incurred $7.9 million in project costs. During the years ended December 31, 2013 and 2012, EROP capitalized interest costs of $0.1 million and $13,800, respectively, and internal development project costs of $0.1 million and $22,878, respectively, related to the development.

In July 2010, the University of Texas Board of Regents selected EROP to be the ground tenant to develop, own and manage a new high-rise collegiate housing community near the core of the University of Texas at Austin campus (2400 Nueces). As of December 31, 2013, EROP had incurred $70.0 million in costs for the project, which opened in August 2013. During the years ended December 31, 2013 and 2012, EROP capitalized interest costs of $1.2 million and $0.9 million, respectively, and internal development project costs of $0.3 million and $0.2 million, respectively, related to the development.

In September of 2010, LeylandAlliance LLC and EROP entered into an agreement to develop the first two phases of Storrs Center, a mixed-use town center project, adjacent to the University of Connecticut. EROP developed, owns and manages the collegiate housing communities in these first two phases and both phases will include commercial and residential offerings. The first phase opened in August 2012 and the second phase opened in August 2013. LeylandAlliance LLC and EROP subsequently entered into an additional agreement to develop the third phase of the project, which was completed in the summer of 2014. As of December 31, 2013, EROP had incurred $29.3 million in project costs for the second phase and $6.0 million for the third phase. During the years ended December 31, 2013 and 2012, EROP capitalized interest costs of $0.6 million and $0.8 million, respectively, and internal development project costs of $0.1 million and $0.1 million, respectively, related to the development.

All costs related to the development of collegiate housing communities are classified as assets under development in the accompanying consolidated balance sheets until the community is completed and opened. EROP has expenditures for assets under development accrued in accounts payable and accrued expenses of $0.4 million and $15.0 million, respectively, as of December 31, 2013. As of December 31, 2012, EROP had expenditures for assets under development accrued in accounts payable and accrued expenses of $0.7 million and $19.3 million, respectively.

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5. Disposition of real estate investments and discontinued operations

On December 19, 2013, EROP sold The Pointe at Western collegiate housing community located in Kalamazoo, Michigan for a sales price of $21.0 million. EROP received proceeds of $20.0 million after closing costs.

On June 19, 2013, EROP sold the College Grove collegiate housing community located in Murfreesboro, Tennessee for a price of $20.7 million. EROP received proceeds of $20.2 million after prorations and closing costs.

In 2012, EROP sold The Reserve at Star Pass and NorthPointe, both located in Tucson, Arizona, and The Reserve on Frankford, located in Lubbock, Texas, for an aggregate sales price of $69.5 million, resulting in net proceeds of approximately $67.3 million after prorations and closing costs.

In 2011, EROP sold the Collegiate Village, located in Macon, Georgia, and Clayton Place, located in Morrow, Georgia, respectively, for an aggregate sales price of $28.0 million resulting in net proceeds of approximately $27.8 million after prorations and closing costs.

On January 19, 2011, EROP sold the following five properties:

•Troy Place, serving Troy University in Troy, Alabama;

•The Reserve at Jacksonville, serving Jacksonville State University in Jacksonville, Alabama;

•The Reserve at Martin, serving University of Tennessee at Martin in Martin, Tennessee;

•The Chase at Murray, serving Murray State University in Murray, Kentucky; and

•Clemson Place, serving Clemson University in Clemson, South Carolina.

The sales price was $46.1 million, and EROP received net proceeds of approximately $29.7 million after the repayment of related debt of $16.1 million, prorations and other closing costs.

Accordingly, the results of operations of all twelve properties are included in discontinued operations in the accompanying consolidated statements of operations for all periods presented. EROP ceased depreciation on the properties when they met the held for sale criteria.

The following table summarizes the income (loss) from discontinued operations for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013			2012			2011
Collegiate housing leasing revenue	$	5,409		$	16,229		$	18,603
Other leasing revenue	—			—			414
Collegiate housing leasing operating expenses	(3,014		)	(8,671		)	(10,518		)
Depreciation and amortization	(1,767		)	(4,634		)	(5,697		)
Loss on impairment	(5,001		)	—			(7,859		)
Interest expense	—			—			(1,045		)
Amortization of deferred financing costs	—			—			(48		)
Loss on extinguishment of debt	—			—			(406		)
Interest income	4			—			—
Income (loss) from discontinued operations attributable to unitholders	$	(4,369	)	$	2,924		$	(6,556	)

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6. Collegiate housing properties and assets under development

Collegiate housing properties consist of the following as of December 31, 2013 and 2012, respectively (in thousands):

	2013			2012
Land	$	126,273		$	115,818
Land improvements	73,618			71,580
Leasehold improvements	74			—
Construction in progress	115,372			208,142
Buildings	1,322,892			943,279
Furniture, fixtures and equipment	71,624			56,757
	1,709,853			1,395,576
Less accumulated depreciation	(204,181		)	(175,310		)
Collegiate housing properties and assets under development, net	$	1,505,672		$	1,220,266

Following is certain information related to investment in collegiate housing properties as of December 31, 2013 (amounts in thousands):

			Initial Cost									Total Costs
Property(4)	Encumbrances		Land		Buildings and Improvements		Total		Cost Capitalized Subsequently			Land		Buildings and Improvements		Total		Accumulated Depreciation(5)		Date of Acquisition/ Construction
College Station at W. Lafayette (2)	$	18,327	$	1,887	$	19,528	$	21,415	$	3,257		$	1,887	$	22,785	$	24,672	$	7,904	1/31/2005
Players Club	—		727		7,498		8,225		2,151			727		9,649		10,376		3,036		1/31/2005
The Commons at Knoxville (1)	20,396		4,630		18,386		23,016		2,907			4,586		21,293		25,879		7,174		1/31/2005
The Commons on Kinnear (7)	12,556		1,327		20,803		22,130		2,403			1,327		23,206		24,533		6,984		1/31/2005
The Lofts	—		2,801		34,117		36,918		2,341			2,801		36,458		39,259		10,462		1/31/2005
The Pointe at Penn State (2)	26,872		2,151		35,094		37,245		4,485			2,151		39,579		41,730		12,236		1/31/2005
The Pointe at South Florida	—		3,508		30,510		34,018		6,014			3,508		36,524		40,032		11,873		1/31/2005
The Reserve at Athens	7,239		1,740		17,985		19,725		1,841			1,740		19,826		21,566		5,779		1/31/2005
The Reserve at Columbia (1)	14,054		1,071		26,134		27,205		4,133			1,071		30,267		31,338		9,351		1/31/2005
The Reserve at Tallahassee	—		2,743		21,176		23,919		5,276			2,743		26,452		29,195		8,350		1/31/2005
The Reserve on Perkins (1) (7)	11,971		913		15,795		16,708		3,627			913		19,422		20,335		6,656		1/31/2005
The Reserve on West 31st	—		1,896		14,920		16,816		5,718			1,896		20,638		22,534		6,813		1/31/2005
University Towers	34,000		—		28,652		28,652		16,692			2,364		42,980		45,344		12,603		1/31/2005
Campus Creek	—		2,251		21,604		23,855		2,741			2,251		24,345		26,596		7,835		2/22/2005
Pointe West	9,594		2,318		10,924		13,242		1,508			2,318		12,432		14,750		4,260		3/17/2005
Campus Lodge	—		2,746		44,415		47,161		2,520			2,746		46,935		49,681		13,471		6/7/2005
The Reserve on South College (3)	7,961		1,744		10,784		12,528		3,523			1,744		14,307		16,051		5,182		7/6/2005
Cape Trails (3)	7,233		445		11,207		11,652		2,022			445		13,229		13,674		3,457		1/1/2006
Carrollton Place	—		682		12,166		12,848		1,621			682		13,787		14,469		3,577		1/1/2006
River Place (3)	6,859		837		17,746		18,583		2,309			837		20,055		20,892		5,290		1/1/2006
The Avenue at Southern	—		2,028		10,675		12,703		4,047			2,028		14,722		16,750		4,939		6/15/2006
The Reserve at Saluki Pointe (6)	—		1,099		32,377		33,476		1,487			1,099		33,864		34,963		5,821		8/1/2008
University Apartments on Colvin	—		—		25,792		25,792		(95		)	—		25,697		25,697		3,935		8/1/2009

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			Initial Cost								Total Costs
Property(4)	Encumbrances		Land		Buildings and Improvements		Total		Cost Capitalized Subsequently		Land		Buildings and Improvements		Total		Accumulated Depreciation(5)		Date of Acquisition/ Construction
2400 Nueces	—		—		7,436		7,436		62,533		—		69,969		69,969		1,107		8/1/2010
The Oaks on the Square - Phase I and II(8)	31,351		1,800		15,189		16,989		34,399		1,800		49,588		51,388		1,108		9/30/2010
GrandMarc at the Corner	—		—		45,384		45,384		1,252		—		46,636		46,636		4,772		10/22/2010
Campus West	—		—		6,127		6,127		21,182		—		27,309		27,309		1,621		3/1/2011
East Edge	—		10,420		10,783		21,203		20,964		10,420		31,747		42,167		1,983		3/1/2011
Jefferson Commons	—		1,420		4,915		6,335		166		1,420		5,081		6,501		461		3/15/2011
Wertland Square	—		3,230		13,285		16,515		574		3,230		13,859		17,089		1,238		3/15/2011
The Berk	—		2,687		13,718		16,405		663		2,687		14,381		17,068		1,317		5/23/2011
Roosevelt Point	32,576		3,093		1,716		4,809		46,805		3,093		48,521		51,614		721		7/1/2011
University Village Towers	—		3,434		34,424		37,858		122		3,434		34,546		37,980		2,357		9/22/2011
Irish Row (1)	13,886		2,637		24,679		27,316		232		2,637		24,911		27,548		1,690		11/1/2011
The Lotus	—		5,245		2,192		7,437		6,424		5,245		8,616		13,861		58		11/14/2011
GrandMarc at Westberry Place	35,697		—		53,935		53,935		1,020		—		54,955		54,955		3,478		12/8/2011
3949	—		3,822		24,448		28,270		8,569		3,822		33,017		36,839		1,202		12/21/2011
The Reserve on Stinson (2)	22,344		2,111		20,609		22,720		800		2,111		21,409		23,520		1,648		1/27/2012
Central Hall I & II	—		—		—		—		25,401		—		25,401		25,401		478		6/1/2012
The Retreat at Oxford	27,100		4,743		—		4,743		31,240		4,743		31,240		35,983		476		6/14/2012
605 West	—		4,794		—		4,794		16,663		4,794		16,663		21,457		—		9/1/2012
The Province	—		4,436		45,173		49,609		53		4,436		45,226		49,662		2,068		9/21/2012
The District on 5th	—		2,601		63,396		65,997		113		2,601		63,509		66,110		3,031		10/4/2012
Campus Village	—		2,650		18,077		20,727		634		2,650		18,711		21,361		1,098		10/19/2012
Champions Court I	—		—		—		—		26,749		—		26,749		26,749		—		11/1/2012
Champions Court II	—		—		—		—		13,561		—		13,561		13,561		—		11/1/2012
The Province at Kent State	—		4,239		40,441		44,680		33		4,239		40,474		44,713		1,681		11/16/2012
The Centre at Overton Park	23,024		3,781		35,232		39,013		559		3,781		35,791		39,572		1,204		12/7/2012
The Suites at Overton Park	24,695		4,384		33,281		37,665		353		4,384		33,634		38,018		1,356		12/7/2012
Haggin Hall I	—		—		—		—		8,614		—		8,614		8,614		—		11/1/2012
Woodland Glen I & II	—		—		—		—		22,933		—		22,933		22,933		—		11/1/2012
The Oaks on the Square - Phase III	235		1,531		—		1,531		4,431		1,531		4,431		5,962		—		2/13/2013
Woodland Glen III, IV & V	—		—		—		—		9,475		—		9,475		9,475		—		5/1/2013
The Cottages on Lindberg	—		1,800		—		1,800		33,964		1,800		33,964		35,764		459		8/28/2013
The Retreat at State College	—		6,251		—		6,251		49,570		6,251		49,570		55,821		581		9/11/2013
The Varsity	32,420		3,300		50,330		53,630		130		3,300		50,460		53,760		—		12/19/2013
Limestone Park I & II	—		—		—		—		177		—		177		177		—		12/31/2013
Totals	$	420,390	$	123,953	$	1,053,058	$	1,177,011	$	532,886	$	126,273	$	1,583,580	$	1,709,853	$	204,181

(1) The Commons at Knoxville, The Reserve at Columbia, The Reserve at Perkins and Irish Row are cross-collateralized against the $56.5 million outstanding loan discussed in Note 10.

(2) The Pointe at Penn State, The Reserve on Stinson and College Station at West Lafayette are cross-collateralized against the $67.5 million outstanding loan discussed in Note 10.

(3) The Reserve on South College, River Pointe and Cape Trails are cross-collateralized against the $22.1 million outstanding loan discussed in Note 10.

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(4) All properties are of garden-style collegiate housing communities except for University Towers which is a traditional residence hall, 2400 Nueces and The Varsity, which are high-rise buildings, The Retreat at Oxford and The Retreat at State College, which are cottage-style communities, and The Oaks on the Square, which will be a mixed-use town center and main street development project located in Storrs, Connecticut.

(5) Assets have useful lives ranging from 3 to 40 years.

(6) The first phase of The Reserve at Saluki Pointe, which included 528 beds, was completed in August 2008. The second phase, which included 240 beds, was completed in August 2009.

(7) The Commons on Kinnear and The Reserve at Perkins are cross-collateralized against the $16.4 million outstanding loan discussed in Note 10.

(8) The first phase of The Oaks on the Square, which included 253 beds, was completed in August 2012. The second phase, which included 250 beds, was completed in August 2013.

The following table reconciles the historical cost of EROP’s investment in collegiate housing properties for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013			2012			2011
Balance, beginning of period	$	1,395,576		$	1,026,503		$	855,151
Collegiate housing acquisitions or completed developments	290,881			353,966			192,178
Collegiate housing dispositions	(55,880		)	(104,117		)	(90,072		)
Impairment loss	(5,001		)	—			(7,859		)
Additions	84,404			120,058			77,474
Disposals	(127		)	(834		)	(369		)
Balance, end of period	$	1,709,853		$	1,395,576		$	1,026,503

The following table reconciles the accumulated depreciation of EROP’s investment in collegiate housing properties for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013			2012			2011
Balance, beginning of period	$	175,310		$	166,336		$	156,358
Depreciation	47,693			35,708			28,568
Disposals	(115		)	(771		)	(347		)
Collegiate housing dispositions	(18,707		)	(25,963		)	(18,243		)
Balance, end of period	$	204,181		$	175,310		$	166,336

When EROP determines that an asset is not recoverable, management estimates fair value using discounted cash flow models, market appraisals if available, and other market participant data. There were no impairment losses in 2012. During 2013 and 2011, management determined that the carrying value of various collegiate housing communities may not be recoverable due to the potential sale of these assets. The fair value of these properties was estimated and management recorded an impairment loss of $5.0 million and $7.9 million during the years ended December 31, 2013 and 2011, respectively. As the related properties were subsequently sold, the impairment loss is recorded in discontinued operations in the accompanying consolidated statements of operations.

7. Corporate office furniture and other assets

As of December 31, 2013 and 2012, EROP had corporate office furniture with a historical cost of $5.8 million and $5.0 million, and accumulated depreciation of $2.5 million and $2.0 million, respectively. Depreciation is computed using the straight-line method for financial reporting purposes over the estimated useful lives of the related assets, generally 3 to 7 years. Depreciation expense totaled $0.6 million, $0.6 million and $0.5 million for the years ended December 31, 2013, 2012 and 2011, respectively.

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Other assets consisted of the following as of December 31, 2013 and 2012 (in thousands):

	2013		2012
Accounts receivable related to pre-development costs	$	2,222	$	3,464
Receivable for construction loan guarantee (see Note 2)	3,000		3,000
Prepaid expenses	1,244		824
Deferred tax asset	2,143		945
Deferred financing costs	6,192		3,373
Investments in unconsolidated entities	21,175		11,796
Deposit	—		3,000
Insurance proceeds receivable (see Note 16)	—		14,665
Other	8,227		10,106
Total other assets	$	44,203	$	51,173

8. Investments in unconsolidated entities

As of December 31, 2013 and 2012, EROP had investments in unconsolidated entities (see Note 2). EROP participates in major operating decisions of, but does not control, these entities; therefore, the equity method is used to account for these investments.

The following is a summary of financial information for EROP’s unconsolidated joint ventures (in thousands):

Financial Position: As of December 31,	2013		2012
Total assets	$	95,380	$	42,942
Total liabilities	58,025		25,394
Equity	$	37,355	$	17,548
EROP’s investment in unconsolidated entities	$	21,175	$	11,796

Results of Operations: For the years ended December 31,	2013			2012			2011
Revenues	$	22,829		$	3,847		$	9,748
Net loss	(1,824		)	(4,013		)	(3,951		)
EROP’s equity in losses of unconsolidated entities	$	(203	)	$	(363	)	$	(447	)

As of December 31, 2013 and 2012, EROP had $1.7 million and $1.5 million, respectively, in liabilities related to investments in unconsolidated entities where distributions exceeded contributions and equity in earnings and EROP has historically provided financial support; therefore, these investments are classified in accrued expenses in the accompanying consolidated balance sheets (see Note 2).

In 2012, EROP invested in a collegiate housing development with GEM Realty Capital to jointly develop and own new off-campus collegiate housing. EROP is a 50% owner and will manage the community once the development is completed. In 2013, EROP invested in a second collegiate housing development with GEM Realty Capital to jointly develop and own new off-campus collegiate housing. EROP is a 50% owner and will manage the community once the development is completed.

Also in 2012, EROP purchased a 10% interest in Elauwit Networks, a provider of Internet access, high definition video and telephone service, in order to secure reliable and advanced technology services for its owned and third-party managed collegiate housing communities. EROP accounts for this investment under the equity method.

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During the year ended December 31, 2012, EROP purchased the majority of the assets from the WEDR Stinson Investors V, LLC joint venture for $22.9 million. EROP recognized $0.1 million as its portion of the loss on the investment as part of equity in losses of unconsolidated entities in the consolidated statement of operations and recorded its share of the proceeds from the sale of $45,000 as a distribution in the accompanying consolidated financial statements.

During the year ended December 31, 2011, EROP purchased the majority of the assets from the WEDR Riverside Investors V, LLC joint venture for $38.1 million. During the year ended December 31, 2011, EROP recognized $0.3 million as its portion of the losses on the investments as part of equity in losses of unconsolidated entities in the accompanying consolidated statement of operations and recorded its share of the proceeds from the sales of $0.2 million as distributions in the accompanying consolidated financial statements.

9. Incentive plans

On May 4, 2011, the Trust’s stockholders approved the Education Realty Trust, Inc. 2011 Omnibus Equity Incentive Plan (the “2011 Plan”). The purpose of the 2011 Plan is to promote the interests of the Trust and its stockholders by attracting, motivating and retaining talented executive officers, employees and directors of the Trust and EROP and linking their compensation to the long-term interests of the Trust and its stockholders. The 2011 Plan replaced the Education Realty Trust, Inc. 2004 Incentive Plan (“2004 Plan”) in its entirety and authorizes the grant of the 315,000 shares that remained available for grant under the 2004 plan, as well as 3,147,500 additional shares. As of December 31, 2013, the Trust had 3,033,098 shares of its common stock reserved for issuance pursuant to the 2011 Plan. Automatic increases in the number of shares available for issuance are not provided. The 2011 Plan provides for the grant of stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, other stock-based incentive awards to employees, directors and other key persons providing services to the Trust and EROP. All employees are employees of EROP.

A restricted stock award is an award of the Trust’s common stock that is subject to restrictions on transferability and other restrictions as the Trust’s compensation committee determines in its sole discretion on the date of grant. The restrictions may lapse over a specified period of employment or the satisfaction of pre-established criteria as the compensation committee may determine. Except to the extent restricted under the award agreement, a participant awarded restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares. Restricted stock is generally taxed at the time of vesting. As of December 31, 2013 and 2012, unearned compensation related to restricted stock totaled $0.8 million and $1.0 million, respectively, and will be recorded as expense over the applicable vesting period. The value is determined based on the market value of the Trust’s common stock on the grant date. During the years ended December 31, 2013, 2012 and 2011, compensation expense of $0.9 million, $0.9 million and $0.7 million, respectively, was recognized in the accompanying consolidated statements of operations, related to the vesting of restricted stock. Effective January 1, 2013 and January 1, 2012, the Trust adopted the 2013 Long-Term Incentive Plan (the "2013 LTIP") and the 2012 Long-Term Incentive Plan (the "2012 LTIP"), respectively. The purpose of the 2013 LTIP and 2012 LTIP is to attract, retain and motivate the executive officers and certain key employees of EROP to promote the long-term growth and profitability of EROP. On January 1, 2013 and 2012, the Trust issued 65,791 and 70,595, respectively, of time vested restricted stock under the 2013 LTIP and 2012 LTIP. The restricted stock granted under the 2013 LTIP and the 2012 LTIP will vest ratably over three years as long as the participants remain employed by EROP.

An RSU award is an award that will vest based upon achievement of total stockholder returns at specified levels as compared to the average total stockholder returns of a peer group of companies and/or the National Association of Real Estate Investment Trusts Equity Index over three years (the “Performance Period”). At the end of the Performance Period, the compensation committee of the Board will determine the level and the extent to which the performance goal was achieved. RSUs that satisfy the performance goal will be converted into fully-vested shares of the Trust’s common stock and the Trust will receive a tax deduction for the compensation expense at the time of vesting. Prior to vesting, the participants are not eligible to vote or receive dividends or distributions on the RSUs. On January 1, 2013, the Trust granted 122,180 performance vested RSUs to executives and key employees under the 2013 LTIP described above. On January 1, 2012, the Trust granted a total of $1.1 million of performance vesting RSUs that are denominated in cash and will convert to common stock at the end of the performance period to executives and key employees under the 2012 LTIP described above. The number of shares of common stock to be issued will be determined on the date of vesting based on the performance level achieved and the price per share of our common stock. As of December 31, 2013 and 2012, unearned compensation related to

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RSUs totaled $0.9 million and $0.8 million, respectively, and will be recorded as expense over the applicable vesting period. The value was determined using a Monte Carlo simulation technique. During the years ended December 31, 2013, 2012 and 2011, compensation expense of $0.8 million, $0.7 million and $0.5 million, respectively, was recognized in the accompanying consolidated statements of operations, related to the vesting of RSUs. On December 31, 2012, 198,750 of fully-vested shares of common stock were issued pursuant to the vesting of RSUs granted in 2010.

Total stock-based compensation recognized in general and administrative expense in the accompanying consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 was $2.1 million, $2.0 million and $1.5 million, respectively. Additionally during the years ended December 31, 2013 and 2012, the Trust issued 33,180 and 32,287 shares, respectively, to its independent directors under the 2011 Plan discussed above.

A summary of the stock-based incentive plan activity as of and for the years ended December 31, 2013, 2012 and 2011 is as follows:

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award		RSU Awards				Weighted-Average Grant Date Fair Value Per RSU
Outstanding as of December 31, 2010	210,000		(1)	$	5.62	204,000				$	5.17
Granted	138,000			7.77		207,000				6.01
Vested	(59,146	)		7.87		—				—
Surrendered	(7,020	)		9.58		—				—
Outstanding as of December 31, 2011	281,834		(1)	6.63		411,000				5.59
Granted	70,595			10.14		—		(2	)	—
Vested	(77,366	)		10.18		(140,802	)			10.64
Surrendered	(27,969	)		10.21		(63,198	)			10.64
Outstanding as of December 31, 2012	247,094		(1)	7.63		207,000				6.01
Granted	65,791			10.64		183,275				7.65
Vested	(91,020	)		10.54		—				—
Surrendered	(37,842	)		10.54		—				—
Outstanding as of December 31, 2013	184,023		(1)	$	8.96	390,275				$	6.78

(1) Represents unvested shares of restricted stock awards as of the date indicated.

(2) On January 1, 2012, the Trust granted a total of $1.1 million of performance vesting RSUs that are denominated in cash and will convert to common stock at the end of the performance period to executives and key employees under the 2012 LTIP if the performance conditions are met.

10. Debt

Revolving credit facility

On January 14, 2013, EROP entered into a Fourth Amended and Restated Credit Agreement. The Fourth Amended and Restated Credit Agreement amended and restated the existing revolving credit facility dated September 21, 2011. The previous facility (the “Third Amended Revolver”) was a secured facility with a maximum availability of $175.0 million and was scheduled to mature on September 21, 2014. The Fourth Amended Revolver is unsecured, has a maximum availability of $375.0 million and, within the first four years of the agreement, may be expanded to $500.0 million upon satisfaction of certain conditions.

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On October 24, 2013, EROP entered into the First Amendment to the Fourth Amended Revolver (as amended, the "Fourth Amended Revolver"). The amendment increased the maximum facility from $375.0 million to $500.0 million with an accordion feature to $700.0 million, which may be exercised during the first four years subject to satisfaction of certain conditions. The initial maturity date of the facility is January 14, 2018, provided that EROP may extend the maturity date for one year subject to certain conditions.

Availability under the Fourth Amended Revolver, as amended, is limited to a “borrowing base availability” equal to the lesser of (i) 60% of the property asset value (as defined in the agreement) and (ii) the loan amount, which would produce a debt service coverage ratio of no less than 1.40. As of December 31, 2013, our borrowing base availability was $500.0 million, and we had $356.9 million outstanding under the Fourth Amended Revolver; thus, our remaining borrowing base availability was $143.1 million.

The Trust serves as the guarantor for any funds borrowed by EROP under the Fourth Amended Revolver. The interest rate per annum applicable to the Fourth Amended Revolver is, at EROP’s option, equal to a base rate or the London InterBank Offered Rate (“LIBOR”) plus an applicable margin based upon our leverage. As of December 31, 2013, the interest rate applicable to the Fourth Amended Revolver was 1.57%.

The Fourth Amended Revolver contains customary affirmative and negative covenants and contains financial covenants that, among other things, require EROP and its subsidiaries to maintain certain minimum ratios of EBITDA (earnings before payment or charges of interest, taxes, depreciation, amortization or extraordinary items) as compared to interest expense and total fixed charges. The financial covenants also include consolidated net worth and leverage ratio tests, and the Trust is prohibited from making distributions in excess of 95% of funds from operations except to comply with the legal requirements to maintain its status as a REIT. As of December 31, 2013, EROP was in compliance with all covenants of the Fourth Amended Revolver.

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Mortgage and construction debt

As of December 31, 2013, EROP had mortgage and construction notes payable consisting of the following, which were secured by the underlying collegiate housing properties or leasehold interests:

Property	Outstanding as of December 31, 2013			Interest Rate			Maturity Date	Amortization
	(in thousands)
Irish Row/The Reserve at Perkins/The Reserve at Columbia/ The Commons at Knoxville(2)	$	56,450		6.02	%		1/1/2019	30 Year
The Reserve at Athens(2)	7,239			4.96	%		1/1/2015	30 Year
The Suites at Overton Park	24,695			4.16	%		4/1/2016	30 Year
The Centre at Overton Park	23,024			5.60	%		1/1/2017	30 Year
College Station at W. Lafayette/The Pointe at Penn State/The Reserve on Stinson(2)	67,543			6.02	%		1/1/2016	30 Year
Pointe West	9,594			4.92	%		8/1/2014	30 Year
The Commons on Kinnear/The Reserve at Perkins(2)	16,413			5.45	%		1/1/2017	30 Year
River Pointe/Cape Trails/The Reserve on South College(2)	22,053			5.67	%		1/1/2020	30 Year
The Varsity	32,420			2.42	%	(3)	8/1/2015	(1)
The Oaks on the Square - Phase I and II	31,351			2.42	%	(3)	10/30/2015	(1)
The Oaks on the Square - Phase III	235			2.11	%	(3)	9/11/2017	(1)
Roosevelt Point	32,576			2.44	%	(3)	3/20/2015	(1)
The Retreat at Oxford	27,100			1.97	%	(3)	6/12/2015	(1)
University Towers	34,000			2.29	%	(3)	7/1/2016	30 Year
GrandMarc at Westberry Place	35,697			5.02	%	(3)	1/1/2020	30 Year
Total debt / weighted average rate	420,390			4.33	%
Unamortized premium	2,291
Total net of unamortized premium	422,681
Less current portion	(13,834		)
Total long-term debt, net of current portion	$	408,847

(1) Represents construction debt that is interest only through the maturity date. See the footnotes below regarding the applicable extension periods.

(2) Represents loans under the Master Secured Credit Facility as defined below.

(3) Represents variable rate debt.

Master Secured Credit Facility

EROP has a credit facility with Fannie Mae (the "Master Secured Credit Facility") that was entered into on December 31, 2008 and expanded on December 2, 2009. All notes under the Master Secured Credit Facility contain cross-default provisions; all properties securing the notes are cross-collateralized. EROP was in compliance with all financial covenants, including consolidated net worth and liquidity tests, contained in the Master Secured Credit Facility as of December 31, 2013.

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During 2013, EROP prepaid a $14.6 million, five-year note under the Master Secured Credit Facility. The debt had a fixed interest rate of 5.99% and was due to mature on January 1, 2014. Two collegiate housing communities, The Avenue at Southern and Carrollton Crossing, were released from the collateral pool simultaneous with the pay-off. The mortgage debt was repaid with proceeds received from borrowings under the Fourth Amended Revolver and cash on hand.

Mortgage debt

On the maturity date of July 1, 2013, EROP refinanced the University Towers mortgage debt. The new mortgage debt has a principal balance of $34.0 million and an initial maturity date of July 1, 2016. The loan may be extended for two 12-month periods, after an extension fee of 0.20% on the outstanding principal is paid, and if the debt service coverage ratio calculated as of the preceding quarter is at least 1.30 to 1.00. The interest rate per year applicable to the loan is, at the option of EROP, equal to a prime rate plus a 0.50% margin or LIBOR plus a 2.10% margin and is interest only through July 1, 2015. The debt service coverage ratio is calculated quarterly on a trailing 12-month basis and must be no less than 1.25 to 1.00, increasing to 1.30 to 1.00 commencing on September 30, 2016 and thereafter. Loan fees of $0.3 million were paid at closing. As of December 31, 2013, the interest rate applicable to the loan was 2.29%.

In December 2012, in connection with the acquisition of the Suites at Overton Park and the Centre at Overton Park collegiate housing communities, both adjacent to Texas Tech University in Lubbock, Texas, EROP assumed $25.1 million and $23.3 million of fixed rate mortgage debt, respectively. The loan for the Suites at Overton Park bears interest at 4.2% and initially matures on April 1, 2016. The loan for the Centre at Overton Park bears interest at 5.6% and initially matures on January 1, 2017. If no event of default has occurred by the initial maturity dates EROP has the option to extend the maturity dates one year at a base rate plus a 2.5% margin. Principal and interest are paid on a monthly basis for both loans.

As of December 31, 2013, EROP had outstanding variable rate mortgage debt of $35.7 million that was assumed in connection with the acquisition of the GrandMarc at Westberry Place collegiate housing community located at Texas Christian University. The interest rate per year applicable to the loan is equal to a base rate plus a 4.85% margin, in total not to exceed 7.5% per year, and principal and interest are paid on a monthly basis. The loan matures on January 1, 2020. As of December 31, 2013, the interest rate applicable to the loan was 5.02%. See Note 18 regarding the repayment of this mortgage subsequent to year-end.

During the year ended December 31, 2012, EROP repaid in full $27.0 million of mortgage debt secured by the collegiate housing community referred to as The Lofts located near the University of Central Florida in Orlando, Florida. The debt had a fixed interest rate of 5.59% and was scheduled to mature in May 2014. EROP also repaid $10.2 million and $4.1 million on construction loans related to the development of a wholly-owned collegiate housing community near Southern Illinois University (The Reserve at Saluki Pointe-Carbondale). The loans bore interest equal to LIBOR plus 110 and 200 basis point margins, respectively, and were scheduled to mature on June 28, 2012. The mortgage debt and construction loans were repaid with proceeds from the Third Amended Revolver and available cash.

During the year ended December 31, 2012, EROP repaid in full $34.0 million of mortgage debt secured by the collegiate housing community referred to as Campus Lodge located near the University of Florida in Gainesville, Florida. The debt had a fixed interest rate of 6.97%, an effective interest rate of 5.48% and was scheduled to mature in May 2012. The mortgage debt was repaid with available cash.

Construction loans

In connection with the acquisition of The Varsity serving the University of Michigan (see Note 4) during the year ended December 31, 2013, EROP assumed a construction loan in the amount of $32.4 million. The interest rate per year applicable to the loan is equal to LIBOR plus a 2.25% margin and is interest only through August 1, 2015. As of December 31, 2013, the interest rate applicable to the loan was 2.42%. On August 1, 2015, if certain conditions for extension are met, we have the the option to extend the loan until August 1, 2017. During the extension period, if applicable, principal and interest are to be repaid on a monthly basis.

As of December 31, 2013, EROP had borrowed $31.4 million on a construction loan related to the development of the first two phases of a wholly-owned collegiate housing community in Storrs, Connecticut (The Oaks on the Square - Phase I and

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II). The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.25% margin or LIBOR plus a 2.25% margin and is interest only through October 30, 2015. As of December 31, 2013, the interest rate applicable to the loan was 2.42%. On October 30, 2015, if certain conditions for extension are met, EROP has the option to extend the loan until October 31, 2016. On October 30, 2016, if certain conditions are met, EROP has the option to extend the loan until October 31, 2017. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. See Note 18 regarding the repayment of this construction loan subsequent to year-end.

As of December 31, 2013, EROP had borrowed $0.2 million on a construction loan related to the development of the third phase of a wholly-owned collegiate housing community in Storrs, Connecticut (The Oaks on the Square - Phase III). The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 0.95% margin or LIBOR plus a 1.95% margin and is interest only through September 11, 2017. As of December 31, 2013, the interest rate applicable to the loan was 2.1%. On September 11, 2017, if certain conditions for extension are met, EROP has the option to extend the loan until September 11, 2018. On September 11, 2018, if certain conditions are met, EROP has the option to extend the loan until September 11, 2019. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. See Note 18 regarding the repayment of this construction loan subsequent to year-end.

As of December 31, 2013, EROP had borrowed $27.1 million on a construction loan related to the development of a jointly owned collegiate housing community near the University of Mississippi (The Retreat at Oxford). EROP is the majority owner and managing member of the joint venture and will manage the community when completed. The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.10% margin or LIBOR plus a 2.10% margin and is interest only through June 12, 2015. As of December 31, 2013, the interest rate applicable to the loan was 1.97%. Once the project is complete and a debt service coverage ratio of not less than 1.30 to 1 is maintained, the interest rate will be reduced to a base rate plus a 0.80% margin or LIBOR plus a 1.80% margin at the option of EROP. If certain conditions for extension are met, EROP has the option to extend the loan twice for an additional year. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis.

As of December 31, 2013, EROP had borrowed $32.6 million on a construction loan related to the development of a jointly owned collegiate housing community near the Arizona State University - Downtown Phoenix campus (Roosevelt Point). EROP is the majority owner and managing member of the joint venture and will manage the community when completed. The loan bears interest equal to LIBOR plus a 225 basis point margin and is interest only through March 20, 2015. As of December 31, 2013, the interest rate applicable to the loan was 2.44%. On March 20, 2015, if the debt service ratio is not less than 1.35 to 1 and an extension fee of 0.25% of the total outstanding principal is paid to the lender, EROP may extend the loan until March 20, 2016. On March 20, 2016, if the debt service ratio is not less than 1.45 to 1 and an extension fee of 0.25% of the total outstanding principal is paid to the lender, EROP can extend the loan until March 20, 2017. During the first and second extension periods, if applicable, principal and interest are to be repaid on a monthly basis.

On December 23, 2013, EROP repaid in full $33.1 million of construction debt secured by the collegiate housing community referred to as East Edge located near the University of Alabama, in Tuscaloosa, Alabama. The construction loan bore interest equal to LIBOR plus a 240 basis point margin and was scheduled to mature on July 1, 2014. The construction loan was repaid with proceeds from the Fourth Amended Revolver and available cash.

On December 23, 2013, EROP also repaid in full $12.3 million of construction debt secured by the collegiate housing community referred to as Campus West located near Syracuse University, in Syracuse, New York. The construction loan bore interest equal to LIBOR plus a 195 basis point margin and was scheduled to mature on December 7, 2014. The construction loan was repaid with proceeds from the Fourth Amended Revolver and available cash.

On September 27, 2013, EROP repaid in full $8.4 million of construction debt secured by the collegiate housing community referred to as University Village Apartments on Colvin located near Syracuse University, in Syracuse, New York. The construction loan bore interest equal to LIBOR plus a 110 basis point margin and was scheduled to mature on September 29, 2013. The construction loan was repaid with proceeds from the Fourth Amended Revolver and available cash.

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As of December 31, 2012, EROP had mortgage and construction notes payable consisting of the following which were secured by the underlying collegiate housing properties or leaseholds of:

Property	Outstanding as of at December 31, 2012			Interest Rate			Maturity Date	Amortization
	(in thousands)
University Towers	$	25,000		5.99	%	(3)	7/1/2013	30 Year
The Avenue at Southern/The Reserve at Columbia/ The Commons at Knoxville/College Grove(2)	57,320			6.02	%		1/1/2019	30 Year
The Reserve at Athens(2)	7,366			4.96	%		1/1/2015	30 Year
The Reserve at Perkins(2)	14,731			5.99	%		1/1/2014	30 Year
The Suites at Overton Park	25,118			4.16	%		4/1/2016	30 Year
The Centre at Overton Park	23,333			5.60	%		1/1/2017	30 Year
College Station at W. Lafayette/The Pointe at Penn State/The Reserve on Stinson(2)	68,585			6.02	%		1/1/2016	30 Year
Pointe West	9,824			4.92	%		8/1/2014	30 Year
University Village Apartments on Colvin	8,527			1.31	%	(3)	9/29/2013	30 Year
Carrollton Crossing/The Commons on Kinnear(2)	16,676			5.45	%		1/1/2017	30 Year
River Pointe/Cape Trails/The Reserve on South College(2)	22,390			5.67	%		1/1/2020	30 Year
The Oaks on the Square - Phase I and II	16,435			2.46	%	(3)	10/30/2015	(1)
Campus West	11,960			2.16	%	(3)	11/30/2014	(1)
East Edge	32,672			2.61	%	(3)	6/30/2014	(1)
ASU Phoenix	8,869			2.50	%	(3)	3/20/2015	(1)
The Retreat	10,639			2.31	%	(3)	7/1/2015	(1)
GrandMarc at Westberry Place	36,333			4.95	%	(3)	1/1/2020	30 Year
Total debt /weighted average rate	395,778			4.86	%
Unamortized premium	3,068
Total net of unamortized premium	398,846
Less current portion	(37,919		)
Total long-term debt, net of current portion	$	360,927

(1) Represents construction debt that is interest only through the maturity date. See the footnotes above regarding the applicable extension periods.

(2) Represents loans under the Master Secured Credit Facility as defined above.

(3) Represents variable rate mortgage debt or construction loans.

The following table reconciles the carrying amount of mortgage and construction notes payable as of and for the years ended December 31, 2013 and 2012 (in thousands):

	2013			2012
Balance, beginning of period	$	398,846		$	358,504
Additions	122,543			119,607
Repayments of principal	(97,931		)	(79,185		)
Amortization of premium	(777		)	(80		)
Balance, end of period	$	422,681		$	398,846

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The scheduled maturities of outstanding mortgage and construction indebtedness as of December 31, 2013 are as follows (in thousands):

Year
2014	$	13,834
2015	135,310
2016	125,378
2017	40,050
2018	2,424
Thereafter	103,394
Total	420,390
Debt premium	2,291
Outstanding as of December 31, 2013, net of debt premium	$	422,681

As of December 31, 2013, the outstanding mortgage and construction debt had a weighted average interest rate of 4.33% and carried a weighted average term of 2.91 years.

11. Segments

EROP defines business segments by their distinct customer base and service provided. EROP has identified three reportable segments: collegiate housing leasing, development consulting services and management services. Management evaluates each segment’s performance based on net operating income, which is defined as income before depreciation, amortization, ground leases, impairment losses, interest expense (income), gains (losses) on extinguishment of debt, gains (losses) on sale of collegiate housing properties, income taxes, equity in earnings (losses) of unconsolidated entities, noncontrolling interests and discontinued operations. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intercompany fees are reflected at the contractually stipulated amounts. Discontinued operations are not included in segment reporting as management addresses these items on a corporate level. The following tables represent EROP’s segment information for the years ended December 31, 2013, 2012 and 2011 (in thousands):

		Year Ended December 31,
		2013			2012			2011
Collegiate Housing Leasing:
	Collegiate housing leasing revenue	$	167,476		$	124,087		$	91,517
	Student housing leasing operations	79,957			59,524			44,892
	Net operating income	$	87,519		$	64,563		$	46,625
	Total segment assets at end of period (1)	$	1,536,699		$	1,257,476		$	879,199
Development Consulting Services:
	Third-party development consulting services	$	3,759		$	1,018		$	5,682
	General and administrative	4,027			3,528			2,998
	Net operating income (loss)	$	(268	)	$	(2,510	)	$	2,684
	Total segment assets at end of period	$	5,187		$	5,695		$	3,007
Management Services:
	Third-party management services	$	3,697		$	3,446		$	3,336
	General and administrative	2,450			2,779			2,667
	Net operating income	$	1,247		$	667		$	669
	Total segment assets at end of period	$	10,135		$	10,218		$	5,399

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		Year Ended December 31,
		2013			2012			2011
Reconciliations:
	Segment revenue	$	174,932		$	128,551		$	100,535
	Operating expense reimbursements	10,214			9,593			8,604
	Eliminations / adjustments	(770		)	(198		)	(1,579		)
	Total revenues	$	184,376		$	137,946		$	107,560
	Segment operating expenses	$	86,434		$	65,831		$	50,557
	Reimbursable operating expenses	10,214			9,593			8,604
	Eliminations / adjustments	—			(44		)	(75		)
	Total operating expenses	$	96,648		$	75,380		$	59,086
	Segment net operating income	$	87,728		$	62,566		$	48,474
	Other unallocated general and administrative expenses	(7,678		)	(7,913		)	(6,726		)
	Depreciation and amortization	(48,098		)	(33,240		)	(23,858		)
	Ground lease	(7,622		)	(6,395		)	(5,498		)
	Nonoperating expenses	(18,837		)	(15,322		)	(18,647		)
	Equity in earnings (losses) of unconsolidated entities	(203		)	(363		)	(447		)
	Income (loss) before income taxes and discontinued operations	$	5,290		$	(667	)	$	(6,702	)
	Total segment assets, end of period (2)	$	1,552,021		$	1,273,389		$	887,605
	Unallocated corporate amounts:
	Cash	10,729			8,436			66,469
	Notes receivable (see Note 2)	18,125			21,000			18,000
	Other receivables	1,456			—			—
	Investments in unconsolidated entities (see Note 8)	20,602			11,796			29
	Deposit	—			3,000			—
	Other assets	4,293			6,017			3,993
	Deferred financing costs, net	3,339			1,049			1,713
	Total assets, end of period	$	1,610,565		$	1,324,687		$	977,809
	(1) The increase in segment assets related to collegiate housing leasing during the year ended December 31, 2013 is primarily related to the purchase of three additional properties and the continued development of fourteen collegiate housing properties for EROP’s ownership offset by the sale of two collegiate housing properties (see Note 5). The increase in segment assets related to collegiate housing leasing during the year ended December 31, 2012 is primarily related to the purchase of seven additional properties and the continued development of eleven collegiate housing properties for EROP's ownership offset by the sale of three collegiate housing properties (see Note 5).
	(2) Total segment assets include goodwill of $2,149 related to management services and $921 related to development consulting services.

12. Related party transactions

EROP incurs certain common costs on behalf of Allen & O’Hara, Inc. (“A&O”), which is 100% owned by the chairman of the Board. These costs relate to human resources, information technology, legal services and certain management personnel. Prior to January 1, 2012, EROP allocated the costs to A&O based on time and effort expended. Indirect costs were allocated monthly in an amount that approximates what management believes costs would have been had A&O operated on a stand-alone basis. For the year ended December 31, 2011, EROP incurred common costs on behalf of A&O in the amount of $0.1 million. For the years ended December 31, 2013 and 2012, EROP charged fees of $32,000 and $54,000, respectively, for the services provided. Beginning in 2013 and continuing through 2014, these shared services are being phased out. By December 31, 2014, EROP will cease to provide services to A&O’s hotel properties operations.

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Prior to December 2012, EROP engaged A&O to procure furniture, fixtures and equipment from third party vendors for its owned and managed properties and for third-party owners in connection with its development consulting projects. EROP incurred a service fee in connection with this arrangement and the expense totaled $0.2 million for each of the years ended December 31, 2012 and 2011. Beginning in December 2012, EROP no longer engaged A&O to perform these services.

13. Lease commitments and unconditional purchase obligations

EROP has various long-term ground lease agreements with terms ranging from 40 to 99 years. Some of these agreements contain an annual increase to rent expense equal to the greater of 3% or the increase in the consumer price index. Additionally, EROP leases corporate office space and the agreement contains rent escalation clauses based on pre-determined annual rate increases. EROP recognizes rent expense under the straight-line method over the terms of the leases. Any difference between the straight-line rent amounts and amounts payable under the leases’ terms are recorded as deferred rent in accrued expenses in the accompanying consolidated balance sheets. As of December 31, 2013 and 2012, deferred rent totaled $15.9 million and $10.5 million, respectively.

EROP has various operating leases for furniture, office and technology equipment which expire at varying times through fiscal year 2023. Rental expense under the operating lease agreements totaled $0.7 million, $0.8 million and $0.6 million, respectively, for the years ended December 31, 2013, 2012 and 2011. Furthermore, EROP has entered into various contracts for advertising which will expire at varying times through fiscal year 2014.

Future minimum rental payments required under operating leases that have initial or remaining noncancellable lease terms as well as future minimum payments required under advertising contracts that have noncancellable terms in excess of one year as of December 31, 2013 are as follows (in thousands):

Year Ending	Advertising		Leases
2014	$	245	$	59,120
2015	—		12,934
2016	—		10,692
2017	—		8,675
2018	—		8,478
Thereafter	—		576,492

14. Employee savings plan

EROP’s eligible employees may participate in a 401(k) savings plan (the “Plan”). Participants may contribute up to 15% of their earnings to the Plan. Employees are eligible to participate in the Plan on the first day of the next calendar quarter following six months of service and reaching 21 years of age. Additionally a matching contribution of 50% is provided on eligible employees’ contributions up to the first 3% of compensation. Employees vest in the matching contribution over their first 3 years of employment then immediately vest in the matching contribution from then on. Matching contributions were approximately $0.2 million for each of the years ended December 31, 2013, 2012 and 2011.

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15. Accrued expenses

Accrued expenses consist of the following as of December 31, 2013 and 2012 (in thousands):

	2013		2012
Payroll	$	3,176	$	2,070
Real estate taxes	6,848		5,421
Interest	2,060		1,780
Utilities	1,203		1,111
Ground leases (including straight-line rent)	15,012		9,554
Construction loan guarantee (see Note 16)	3,000		3,000
Assets under development	15,034		19,312
Deferred revenue related to insurance proceeds (See Note 16)	5,998		3,860
Other	13,026		9,266
Total accrued expenses	$	65,357	$	55,374

16. Commitments and contingencies

In April 2013, EROP entered into a presale agreement with a private developer that obligates EROP to purchase a newly developed collegiate housing property adjacent to Florida International University for $43.5 million as long as the developer completes the project in time for fall 2014 occupancy. Subsequent to year-end, EROP acquired this property (see Note 18).

EROP entered into a letter of credit agreement in conjunction with the closing of the acquisition of a collegiate housing community at the University of Florida. The mortgage debt on this community was repaid during the year ended December 31, 2012 (see Note 10), and the $1.5 million letter of credit is no longer outstanding.

EROP serves as non-recourse, carve-out guarantor, for secured third party debt in the amount of $24.0 million, held by one unconsolidated joint venture. EROP is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates. Therefore, exposure under the guarantee for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates is not expected to exceed EROP’s proportionate interest in the related mortgage debt of $6.0 million.

EROP, along with the joint venture partner, have jointly and severally guaranteed partial repayment for secured third-party construction debt held by one unconsolidated joint venture under development. The partial repayment guaranty is limited to $8.8 million. In addition, EROP serves as a non-recourse, carve-out guarantor for the secured third-party debt and is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates. Therefore, exposure under the guaranties for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates are not expected to exceed EROP's proportionate interest in the related mortgage debt in the case of the non-recourse, carve-out guaranty, or in EROP's proportionate interest in the partial repayment guaranty of $8.8 million. As of December 31, 2013, the joint venture had drawn $13.1 million on the construction loans.

In connection with the development agreement entered into on July 14, 2010 for a project at the Science + Technology Park at Johns Hopkins Medical Institute (see Note 2), EROP committed to provide a guarantee of repayment of a $42.0 million third-party construction loan for a $3.0 million fee, of which the carrying value approximates fair value. The guarantee fee

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will not be recognized until the second mortgage loan is repaid. The project will have a $2.5 million reserve to fund any operating or debt service shortfalls that are to be replenished annually by East Baltimore Development, Inc., until a 1.10 debt service coverage ratio is achieved for twelve consecutive months. The second mortgage loan and related debt service are the first at risk if such reserve is not adequate to cover operating expenses and debt service on the construction loan. See Note 18 related to subsequent events regarding this development.

In connection with the condominium agreement related to The Oaks on the Square project in Storrs, Connecticut (see Note 4) EROP and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment of a $46.4 million construction loan to develop the residential and retail portions of the first two phases of the project. As of December 31, 2013 and 2012, $43.2 million and $22.7 million, respectively, had been drawn on the construction loan of which $11.8 million and $6.3 million, respectively, is attributable to LeylandAlliance LLC; these amounts are not included in our accompanying consolidated financial statements. During August, 2013, EROP and LeylandAlliance LLC entered into a $13.8 million construction loan for the third phase of the project. Similar to the construction loan for the first and second phases, EROP and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment for the construction loan. As of December 31, 2013, $1.3 million had been drawn on the construction loan, of which $1.0 million, is attributable to LeylandAlliance LLC; these amounts are not included in our accompanying consolidated financial statements. Subsequent to year-end, the construction loans for phases I, II and III were repaid, and EROP was released from all guarantee obligations.

As owners and operators of real estate, environmental laws impose ongoing compliance requirements on EROP. EROP is not aware of any environmental matters or liabilities with respect to the collegiate housing communities that would have a material adverse effect on EROP’s consolidated financial condition or results of operations.

In the normal course of business, EROP is subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of such matters, in management’s opinion, the liabilities, if any, are not expected to have a material effect on our financial position, results of operations or liquidity.

Under the terms of the limited partnership agreement of University Towers Operating Partnership, LP, so long as the contributing owners of such property hold at least 25% of the University Towers Partnership Units, EROP has agreed to maintain certain minimum amounts of debt on the property to avoid triggering gain to the contributing owners. If EROP fails to do this, EROP must repay the contributing owners the amount of taxes they incur.

17. Quarterly financial information (unaudited)

Quarterly financial information for the years ended December 31, 2013 and 2012 is summarized below (in thousands, except per unit data):

2013	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Revenues	$	44,671		$	41,038		$	43,469		$	55,198		$	184,376
Operating expenses	37,558			37,344			42,718			42,426			160,046
Nonoperating expenses	4,355			4,141			4,878			5,463			18,837
Equity in losses of unconsolidated entities	(20		)	(21		)	(61		)	(101		)	(203		)
Income taxes expense/(benefit)	(237		)	—			(32		)	472			203
Noncontrolling interests	132			(184		)	—			279			227
Discontinued operations(1)	503			4,157			(326		)	(4,790		)	(456		)
Net income (loss) attributable to unitholders	$	3,346		$	3,873		$	(4,482	)	$	1,667		$	4,404
Net income (loss) per unit-basic and diluted	$	0.03		$	0.03		$	(0.04	)	$	0.02		$	0.04

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2012	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			Total
Revenues	$	33,233		$	31,473		$	32,041		$	41,199		$	137,946
Operating expenses	27,568			28,169			34,040			33,151			122,928
Nonoperating expenses	4,438			3,729			3,533			3,622			15,322
Equity in losses of unconsolidated entities(2)	(263		)	(38		)	(39		)	(23		)	(363		)
Income taxes expense/(benefit)	(75		)	(404		)	(638		)	233			(884		)
Noncontrolling interests	191			(107		)	(136		)	144			92
Discontinued operations(1)	1,075			1,235			5,303			807			8,420
Net income attributable to unitholders	$	1,923		$	1,283		$	506		$	4,833		$	8,545
Net income per unit-basic and diluted	$	0.02		$	0.01		$	—		$	0.04		$	0.08

(1) All quarterly information presented above for 2013 and 2012 reflects the classification of the properties sold during 2013 and 2012 in discontinued operations (see Note 5). Discontinued operations for the 4th quarter of 2013 includes an impairment loss of $5,001.

(2) Equity in losses for the 1st quarter of 2012 includes EROP's $88 share of the loss on the sale of assets.

18. Subsequent events

Distributions

The Trust's Board declared a fourth quarter distribution of $0.11 per unit for the quarter ended on December 31, 2013. The distribution was funded by EROP and paid on February 14, 2014 to unitholders of record at the close of business on January 31, 2014. Subsequent to year-end, the Trust's Board has also declared distributions of $0.35 per share of common stock pertaining to the nine months ended September 30, 2014. The distributions were or will be funded by EROP to the unitholders of record on the applicable date. The distribution for the three months ended September 30, 2014 ($0.12 per share of common stock) will be paid on November 15, 2014.

Credit Facilities

On January 13, 2014, EROP and certain of its subsidiaries (together with EROP, the “Borrowers”), each of which is an indirectly owned subsidiary of the Trust, entered into a Credit Agreement. The Credit Agreement provides for unsecured term loans in the initial aggregate principal amount of $187.5 million, consisting of a $122.5 million Tranche A term loan with a seven-year maturity (the “Tranche A Term Loan”) and a $65.0 million Tranche B term loan with a five-year maturity (the “Tranche B Term Loan” and, together with the Tranche A Term Loan, the “Term Loans”). The Credit Agreement contains an accordion feature pursuant to which the Borrowers may request that the total aggregate amount of the Term Loan be increased to $250.0 million, which may be allocated to Tranche A or Tranche B, subject to certain conditions, including obtaining commitments from any one or more lenders to provide such additional commitments. EROP used proceeds from the Term Loan to repay a portion of the outstanding balance under the Fourth Amended Revolver.

The interest rate per annum on the Tranche A Term Loan is, at the Borrowers’ option, equal to a base rate or LIBOR plus an applicable margin ranging from 155 to 225 basis points, depending upon leverage. The interest rate per annum on the Tranche B Term Loan is, at the Borrowers’ option, equal to a base rate or LIBOR plus an applicable margin ranging from 120 to 190 basis points, depending upon leverage.

The Credit Agreement contains customary affirmative and restrictive covenants substantially similar to those contained in the Fourth Amended Revolver. The Trust serves as the guarantor for any funds borrowed by the Borrowers under the Credit Agreement.

In connection with entering into the Credit Agreement, EROP entered into multiple interest rate swaps with notional amounts totaling $187.5 million to hedge the interest payments on the LIBOR-based Term Loans. As of the date of the Credit

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Agreement, the blended interest rate on the Tranche A Term Loan was 3.95% (weighted average swap rate of 2.30% plus the current margin of 1.65%) and the blended interest rate on the Tranche B Term Loan was 2.96% (weighted average swap rate of 1.66% plus the current margin of 1.30%).

Mortgage and Construction Debt

On January 31, 2014, EROP repaid outstanding variable rate mortgage debt of $35.6 million that was secured by the GrandMarc at Westberry collegiate housing community located at Texas Christian University. A prepayment penalty of $0.4 million was incurred as a result of the prepayment. At payoff, the interest rate of the debt was 4.88%. The loan was repaid with proceeds from the Fourth Amended Revolver and available cash.

On April 1, 2014, EROP repaid in full the $32.3 million construction loan on The Oaks on the Square (Phase I and II). At payoff, the interest rate of the debt was 2.41%. On September 30, 2014, EROP repaid in full the $8.2 million construction loan on The Oaks on the Square (Phase III). At payoff, the interest rate of the debt was 2.1%. The loans were repaid with a combination of proceeds from the Fourth Amended Revolver and available cash on hand.

Third-Party Developments

On July 1, 2014, the third-party owners of our development at John Hopkins University successfully closed on permanent financing for the community. The proceeds from the refinancing were used to repay in full their construction loan as well as the $18.0 million second mortgage loan advanced by EROP. At the time of refinancing, EROP was released from the related guarantee obligations and also recognized the $3.0 million guarantee fee during the three months ending September 30, 2014.

Acquisitions

During the three months ended September 30, 2014, EROP completed the following two collegiate housing property acquisitions:

Name	Primary University Served	Acquisition Date	# of Beds	# of Units	Contract Price (in thousands)
109 Tower	Florida International University Miami, Florida	Aug 2014	542	149	$	43,500
District on Apache	Arizona State University Tempe, Arizona	Sept 2014	900	279	$	89,800

Combined acquisition costs for these purchases were $0.9 million. EROP funded these acquisitions with proceeds from draws on the Fourth Amended Revolver (see Note 4) and cash on hand. Due to the timing of the completion of the acquisitions, work is still ongoing to determine the fair value of those assets and liabilities as of the acquisition date. The purchase price allocation is expected to be finalized by December 31, 2014.  A preliminary allocation of the purchase price to the fair values of assets acquired and liabilities assumed as of the dates of the acquisitions are as follows (in thousands):

	109 Tower			District on Apache			Total
Collegiate housing properties	$	43,384		$	89,216		$	132,600
Goodwill and other intangibles, net	—			643			643
Other assets	200			36			236
Current liabilities	(746		)	(1,341		)	(2,087		)
Total net assets acquired	$	42,838		$	88,554		$	131,392

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The difference between the collegiate housing property acquisition contract prices of $133.3 million and the total net assets acquired of $131.4 million is primarily related to $1.9 million of net liabilities assumed.

The unaudited pro forma revenue and net income had the acquisition date been January 1, 2013, are as follows:

	Revenue		Net income		Net income attributable to unitholders per share - basic and diluted
	(in thousands)
2013 supplemental proforma for 1/1/13 – 12/31/13 (1)	$	185,774	$	4,968	$	0.04

⁽¹⁾ Supplemental pro forma earnings for the year ended December 31, 2013 were adjusted to include acquisition costs of $0.4 million. As 109 Tower opened for the 2014/2015 lease year, the supplemental pro forma revenue and net income for the period January 1, 2013 - December 31, 2013 only includes The District on Apache. In addition, as The District on Apache opened for the 2013/2014 lease year, the supplemental pro forma revenue and net income for January 1, 2013 to December 31, 2013 does not include a full year of operations.

Dispositions

Subsequent to year-end, EROP completed the following four property dispositions:

• The Reserve on West 31st at the University of Kansas;

• College Station at West Lafayette at Purdue University;

• Pointe West serving the University of South Carolina; and

• The Reserve on South College serving Auburn University.

The dispositions had a combined sales price of $71.7 million. The net proceeds from the dispositions were used to pay off existing mortgage debt in the amount of $16.7 million, if applicable, with the remaining proceeds used to pay down the fourth Amended Revolver or used for general corporate purposes. A gain of $19.3 million was recorded as a result of these property dispositions.

Additionally, in August 2014, EROP entered into a sales agreement for the sale of The Pointe at South Florida in Tampa, Florida for $31.0 million. The sale closed on October 8, 2014. EROP received cash proceeds of $29.7 million, net of closing costs and prorations, and is expected to recognize a gain of approximately $2.3 million in the fourth quarter of 2014.

Other

In June 2014, EROP announced an agreement with a subsidiary of Landmark Property Holdings, LLC ("Landmark") to develop, own and manage a new 656-bed cottage-style collegiate housing property adjacent to The University of Louisville. EROP is the majority owner and managing member of the joint venture and will manage the community once completed. As of September 30, 2014, EROP and Landmark have incurred minimal costs for the project. The community is expected to open in the summer of 2015.

On June 24, 2014, the Trust completed a follow-on equity offering of 24.5 million shares of its common stock, which included 3.2 million shares purchased by the underwriters pursuant to an option to purchase additional shares. The Trust received approximately $239.4 million in net proceeds from the offering after deducting the underwriting discount and other offering expenses payable by the Trust. The Trust contributed the proceeds to EROP and EROP used the proceeds to pay down the unsecured revolving credit facility.

As discussed in Note 4, in July 2012, EROP's 3949 community located in St. Louis, Missouri was partially destroyed by a fire. The community was rebuilt and fully reopened in August 2013. This fire caused substantial business interruption and property damage, both of which are covered under EROP's existing insurance policies. For the years ended December 31, 2013 and 2012, EROP recognized business interruption proceeds of $1.7 million and $1.2 million, respectively. These amounts are included in collegiate housing leasing revenues in the accompanying consolidated financial statements. Insurance claims were settled subsequent to year-end and EROP recognized a gain of $8.1 million.

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On July 9, 2014, EROP entered into a construction loan agreement related to the development of a jointly owned cottage-style community located in Louisville, Kentucky (The Retreat at Louisville). EROP is the majority owner and will the manage the community once it is completed. The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.05% margin or LIBOR plus a 2.05% margin and is interest only though July 10, 2017. On July 10, 2017, if certain conditions are met, EROP has the option to extend the loan until July 9, 2018 and another year thereafter. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. As of September 30, 2014, there were no amounts outstanding under the construction loan.

On August 5, 2014, Bill Brewer named chief financial officer of the Trust and replaced Randy Brown, who resigned effective June 30, 2014.

During October 2014, the Operating Partnership and LeylandAlliance LLC entered into a $38.0 million construction loan for the fourth phase of the The Oaks on the Square project. The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.0% margin or LIBOR plus a 2.0% margin and is interest only though October 20, 2017. On October 21, 2017, if certain conditions are met, EROP has the option to extend the loan until October 19, 2018 and another year thereafter. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. Similar to the construction loan for the first three phases, the Operating Partnership and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment for the construction loan.

The Trust sold 2.9 million shares under equity distribution agreements during the nine months ended September 30, 2014 for net proceeds of approximately $31.9 million, which were contributed to EROP.

On October 24, 2014, the Trust entered into three equity distribution agreements pursuant to which the Trust may issue and sell shares of common stock having an aggregate gross offering amount of up to $150 million.

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EX-99.2

EXHIBIT 99.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

of Education Realty Operating Partnership, L.P.

December 31, 2013

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes that are included in Exhibit 99.1 of this Form 8-K. Capitalized terms used, but not defined, in this Management's Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the consolidated financial statements. In this discussion, the terms "we", "us", "our", "EROP", and the "Operating Partnership" refer to Education Realty Operating Partnership, LP and its subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements included in this section or elsewhere in this report may be deemed “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations and funds from operations, our strategic plans and objectives, cost management, occupancy and leasing rates and trends, liquidity and ability to refinance our indebtedness as it matures, anticipated capital expenditures (and access to capital) required to complete projects, amounts of anticipated cash distributions to our unitholders in the future and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecast in the forward-looking statements.

Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to:

• risks and uncertainties related to the national and local economies and the real estate industry in general and in our specific markets (including university enrollment conditions and admission policies, and our relationship with these universities);

• volatility in the capital markets;

• rising interest and insurance rates;

• competition from university-owned or other private collegiate housing and our inability to obtain new tenants on favorable terms, or at all, upon the expiration of existing leases;

• availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures;

• legislative or regulatory changes, including changes to laws governing collegiate housing, construction and real estate investment trusts;

• our possible failure to qualify as a real estate investment trust and the risk of changes in laws affecting real estate investment trusts;

• our dependence upon key personnel whose continued service is not guaranteed;

• our ability to identify, hire and retain highly qualified executives in the future;

• availability of appropriate acquisition and development targets;

• failure to integrate acquisitions successfully;

• the financial condition and liquidity of, or disputes with, our joint venture and development partners;

• impact of ad valorem, property and income taxes;

• changes in generally accepted accounting principles;

• construction delays, increasing construction costs or construction costs that exceed estimates;

• potential liability for uninsured losses and environmental liabilities;

• lease-up risks; and

• the potential need to fund improvements or other capital expenditures out of operating cash flow.

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This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. New factors may also emerge from time to time that could materially and adversely affect us. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative on our financial condition, results of operations, liquidity and certain other factors that may affect our future results from the perspective of our management. Our MD&A is presented in eleven sections:

• Overview

• Our Business Segments

• Trends and Outlook

• Critical Accounting Policies

• Results of Operations

• Liquidity and Capital Resources

• Distributions

• Off-Balance Sheet Arrangements

• Non GAAP Measures

• Inflation

• Recent Accounting Pronouncements

Unless otherwise noted, this MD&A relates only to results from continuing operations. The years ended December 31, 2013, 2012 and 2011 reflect the classification of the following communities’ financial results as discontinued operations: Troy Place, The Reserve at Jacksonville, The Reserve at Martin, The Chase at Murray and Clemson Place (all sold in January 2011); Collegiate Village (sold in April 2011); Clayton Station (sold in June 2011); NorthPointe and The Reserve on Frankford (both sold in September 2012); The Reserve at Star Pass (sold in December 2012); College Grove (sold in June 2013) and Pointe at Western (sold in December 2013).

Overview

We are a Delaware limited partnership that is engaged in the ownership, acquisition, development and management of high-quality collegiate housing communities. We also provide collegiate housing management and development consulting services to universities, charitable foundations and other third parties. We believe that we are one of the largest private owners, developers and managers of high-quality collegiate housing communities in the United States in terms of total beds both owned and under management.

We earn income from rental payments we receive as a result of our ownership of collegiate housing communities. We also earn income by performing property management services and development consulting services for third parties through our Management Company and our Development Company, respectively.

The general partner of Education Realty Operating Partnership, LP ("EROP") is Education Realty OP GP, Inc. ("OP GP"), an entity that is wholly owned by Education Realty Trust, Inc. (the "Trust"), which is publicly traded on the New York Stock Exchange ("NYSE") under the ticker symbol "EDR". The limited partners of EROP are Education Realty OP Limited Partner Trust, a wholly owned subsidiary of the Trust, and other limited partners consisting of current and former members of management and non-affiliated third parties. The Trust has elected to be taxed as a real estate investment trust ("REIT") for federal income tax purposes.

Our Business Segments

We define business segments by their distinct customer base and the service provided. Management has identified three reportable segments: collegiate housing leasing, development consulting services and management services. We evaluate each segment’s performance based on net operating income, which is defined as income before depreciation, amortization, ground leases, impairment losses, interest expense (income), gains (losses) on extinguishment of debt, equity in earnings of unconsolidated entities, noncontrolling interests and discontinued operations. The accounting policies of the reportable

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segments are described in more detail in the summary of significant accounting policies in the notes to the accompanying consolidated financial statements.

Collegiate housing leasing

Collegiate housing leasing revenue represented approximately 95.7% of our total revenues, excluding operating expense reimbursements and other adjustments/eliminations included in our segment reporting, for the year ended December 31, 2013.

Unlike multi-family housing where apartments are leased by the unit, collegiate-housing communities are typically leased by the bed on an individual lease liability basis. Individual lease liability limits each resident’s liability to his or her own rent without liability for a roommate’s rent. The number of lease contracts that we administer is therefore equivalent to the number of beds occupied instead of the number of apartment units occupied. A parent or guardian is required to execute each lease as a guarantor unless the resident provides adequate proof of income and/or pays a deposit, which is usually equal to two months rent.

Due to our predominantly private bedroom accommodations and individual lease liability, the high level of student-oriented amenities and the fact that most units are furnished and typically rent includes utilities, cable television and internet service, we believe our communities in most cases can command higher per-unit and per-square foot rental rates than most multi-family communities in the same geographic markets. We are also typically able to command higher rental rates than on-campus collegiate housing, which tends to offer fewer amenities.

The majority of our leases commence mid-August and terminate the last day of July. These dates generally coincide with the commencement of the universities’ fall academic term and the completion of the subsequent summer school session. As such, we are required to re-lease each community in its entirety each year, resulting in significant turnover in our tenant population from year to year. In 2013 and 2012, approximately 81.3% and 74.6%, respectively, of our leased beds were to students who were first-time residents at our communities. As a result, we are highly dependent upon the effectiveness of our marketing and leasing efforts during the annual leasing season that typically begins in November and ends in August of each year. Our communities’ occupancy rates are therefore typically stable during the August to July academic year but are susceptible to fluctuation at the commencement of each new academic year.

Prior to the commencement of each new lease period, mostly during the first two weeks of August, but also during September at some communities, we prepare the units for new incoming tenants. Other than revenue generated by in-place leases for returning tenants, we do not generally recognize lease revenue during this period referred to as “Turn,” as we have no leases in place. In addition, we incur significant expenses during Turn to make our units ready for occupancy. These expenses are recognized when incurred. This Turn period results in seasonality in our operating results during the third quarter of each year.

Development consulting services

For the year ended December 31, 2013, revenue from our development consulting services represented approximately 2.2% of our total revenues, excluding operating expense reimbursements and other adjustments/eliminations included in our segment reporting. We provide development consulting services primarily to colleges and universities seeking to modernize their on-campus collegiate housing communities, to other third-party investors and to our collegiate housing leasing segment in order to develop communities for our ownership. Our development consulting services typically include the following:

• market analysis and evaluation of collegiate housing needs and options;

• cooperation with college or university in architectural design;

• negotiation of ground lease, development agreement, construction contract, architectural contract and bond documents;

• oversight of architectural design process;

• coordination of governmental and university plan approvals;

• oversight of construction process;

• design, purchase and installation of furniture;

• pre-opening marketing to students; and

• obtaining final approvals of construction.

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Fees for these services are typically 3 – 5% of the total cost of a project and are payable over the life of the construction period, which in most cases is one to two years in length. Occasionally, the development consulting contracts include a provision whereby we can participate in project savings resulting from successful cost management efforts. These revenues are recognized once all contractual terms have been satisfied and no future performance requirements exist. This typically occurs after construction is complete. As part of the development agreements, there are certain costs we pay on behalf of universities or third-party investors. These costs are included in reimbursable operating expenses and are required to be reimbursed to us by the universities or third-party investors. We recognize the expense and revenue related to these reimbursements when incurred. These operating expenses are wholly reimbursable and therefore not considered by management when analyzing the operating performance of our development consulting services business.

Management services

For the year ended December 31, 2013, revenue from our management services segment represented approximately 2.1% of our total revenues, excluding operating expense reimbursements and other adjustments/eliminations included in our segment reporting. We provide management services for collegiate housing communities owned by educational institutions, charitable foundations, EROP and others. Our management services typically cover all aspects of community operations, including residence life and student development, marketing, leasing administration, strategic relationships, information systems and accounting services. We provide these services pursuant to multi-year management agreements under which management fees are typically 3 – 5% of leasing revenue. These agreements usually have an initial term of two to five years with renewal options of like terms. As part of the management agreements, there are certain payroll and related expenses we pay on behalf of the property owners. These costs are included in reimbursable operating expenses and are required to be reimbursed to us by the property owners. We recognize the expense and revenue related to these reimbursements when incurred. These operating expenses are wholly reimbursable and therefore not considered by management when analyzing the operating performance of our management services business.

Trends and Outlook

Rents and occupancy

We manage our communities to maximize revenues, which are primarily driven by two components: rental rates and occupancy. We customarily adjust rental rates in order to maximize revenues, which in some cases results in a lower occupancy rate, but in most cases results in stable or increasing revenue from the community. As a result, a decrease in occupancy may be offset by an increase in rental rates and may not be material to our operations. Periodically, certain of our markets experience increases in new on-campus collegiate housing provided by colleges and universities and off-campus collegiate housing provided by private owners. This additional collegiate housing both on and off campus can create competitive pressure on rental rates and occupancy.

Over the last couple of years, there has been an increase in supply across the student housing industry. In the markets we serve, we are projecting a 2.2% increase in supply in 2014, which is consistent with the level of new supply added in 2013. This growth in student housing beds is slightly outpacing enrollment growth in those markets where the 3-year compounded annual growth rate in enrollment is 1.4%. Although these statistics in themselves are not favorable, we feel that it does not reflect the pent-up demand that exists in college communities for new, purpose-built student housing product, where students are moving out of old, outdated housing and into the newer communities with more amenities. We believe that the 5% growth in same store revenue we achieved in our last leasing cycle for the 2013-2014 academic year and our strong start to preleasing for the 2014-2015 academic year as well as other market data support this point. As a result, we believe that the growth characteristics of our portfolio, which has produced a compounded annual growth rate of 4.3% over the last four years, has not changed significantly.

We define our same-community portfolio as properties that were owned and operating for the full year ended December 31, 2013 and 2012 and are not conducting or planning to conduct substantial development or redevelopment activities and are not classified as discontinued operations. The collegiate housing community referred to as 3949 at Saint Louis University is excluded from our same-community portfolio as it was damaged by fire on July 17, 2012. The community was insured and reopened in August 2013. 3949 is the only community excluded from same-community as a result of redevelopment activities. Our communities’ occupancy rates are typically stable during the August to July academic year but are susceptible to fluctuation at the commencement of each new academic year. For the year ended December 31, 2013, same-community revenue per available bed increased to $506 and same-community physical occupancy decreased to 90.1%, compared to same-community revenue per available bed of $500 and same-community physical occupancy of 91.4% for the year ended

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December 31, 2012. The results represent averages for our same-community portfolio, which are not necessarily indicative of every community in the portfolio. Individual communities can and do perform both above and below these averages, and, at times, an individual community may experience a decline in total revenue due to local university and economic conditions. Our management focus is to assess these situations and address them quickly in an effort to minimize our exposure and reverse any negative trends.

The same-community portfolio opened the 2013/2014 lease term with a 5.0% increase in rental revenue. Opening occupancy was up 300 basis points to 94.1% and net rental rates were 2.0% above the prior lease term. New-communities opened the 2013/2014 with an average occupancy of 95.1%, with four out of five of the 2013 development communities opening at or above 100% occupancy.

Development consulting services

Prior to the recent recession, EROP historically earned more than $5.0 million annually in third-party development revenue. However, as a result of a deterioration in the credit markets, which began in late 2008, financing of new projects became harder to obtain, and our third-party development revenue declined from $8.2 million for the year ended December 31, 2009 to $2.5 million in 2010 and then rebounded to $4.1 million in 2011 before declining to $0.8 million for the year ended December 31, 2012. For the year ended December 31, 2013, third-party development revenue was $3.0 million. Beginning in the summer of 2010, our development team began seeing improvement in the credit markets and an increase in interest from colleges and universities that are considering new collegiate housing. We also continue to receive requests for proposals on new development projects. Although volume has returned to the market, we would not expect our future run rate of third-party development fees to return to the levels achieved in 2009.

We develop collegiate housing communities for our ownership, and we plan to increase self-development activity going forward. The On-Campus Equity Plan, or The ONE Plan^SM, is our private equity program for universities, which allows universities to use our equity and financial stability to develop and revitalize campus housing while preserving their credit capacity for other campus projects. This program is designed to provide our equity to solve a university’s housing needs through a ground lease structure where EROP owns the land improvements and operates the community. Others in the industry have similar programs and to date we have ten ONE Plan^SM projects completed or underway. In December 2011, EROP was selected by the University of Kentucky, or UK, to negotiate the potential revitalization of UK's entire campus housing portfolio and expansion of UK's campus housing portfolio to more than 9,000 beds within five to seven years, which we refer to as the UK Campus Housing Revitalization Plan. Construction on Phase I of the UK Campus Revitalization Plan, a 601-bed community called Central Hall I & II opened in August 2013 with all beds leased. Construction of Phase II, which includes four communities with 2,381 beds and a total project cost of approximately $138.0 million, is well underway for a summer 2014 opening. In May 2013, the Capital Projects and Bond Oversight Committee of the Kentucky Legislature provided the final required approval to proceed with Phase II-B, the next phase of the UK Campus Housing Revitalization Plan. With a total project cost of $101.2 million, this phase of the project is expected to be delivered in 2015 and will include 1,610 beds in three buildings. The UK Board of Trustees recently approved the 2016 deliveries, comprising 1,141 beds at a total cost of $83.9 million. We view our entry into the partnership with UK as a defining moment, not only for us, but also for our industry. Most state universities face many of the same challenges as UK, including reduced support from constrained state budgets, aged on-campus housing and demands on institutional funds for academic and support services. This declining state support for higher education is the norm rather than the exception. These external factors provide a great opportunity for us. The volume of discussions we are having with other universities has increased over the last year as additional universities investigate this type of structure to replace their aging on-campus housing stock. We expect the volume of true third-party fee development contracts to be impacted as more universities avail themselves of this new program.

While considering the possible shift in the type of projects universities pursue, the amount and timing of future revenue from development consulting services will be contingent upon our ability to successfully compete in public colleges and universities’ competitive procurement processes, our ability to successfully structure financing of these projects and our ability to ensure completion of construction within committed timelines and budgets. To date, we have completed construction on all of our development consulting projects in time for their targeted occupancy dates.

Collegiate housing operating costs

For the last four years, excluding the increase in 2013, same-community operating expenses have either declined or increased no more than 2.9%. For the year ended December 31, 2013, same-community operating expenses increased approximately 4.2%. This increase was mainly driven by higher marketing costs and real estate taxes. We expect full year same-community operating expenses to increase between 3.0-4.0% going forward, which we believe is a reasonable level of growth for the foreseeable future.

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General and administrative costs

General and administrative costs for the year ended December 31, 2013 were $7.1 million (before development pursuit costs and acquisition costs), an increase of $0.3 million, or 4.1%, when compared to the same period in the prior year. This increase was the result of salary and general inflationary increases. With the 21% growth in gross assets in 2013 and anticipated 17% growth in gross assets in 2014, we expect general and administrative costs to continue to increase.

Asset repositioning and capital recycling

Since the beginning of 2010, we have made a concerted effort to reposition and improve our owned portfolio with most of the significant process completed prior to 2013. These efforts include the following transactions:

• In 2010 and 2011, we sold a total of twelve communities for a combined sales price of $112.8 million. These communities were located at mostly smaller universities with limited barriers to entry;

• Between November 2010 and January 2012, we purchased $256.0 million of assets within walking distance of universities such as the University of Virginia, University of California–Berkeley, University of Notre Dame, Texas Christian University and Saint Louis University;

• In 2012, we sold three communities, The Reserve at Star Pass and NorthPointe, both serving the University of Arizona, and The Reserve on Frankford, serving Texas Tech University for net cash proceeds of approximately $67.3 million (see Note 5 to the accompanying consolidated financial statements);

• In 2012, we purchased the collegiate housing community referred to as The Province, adjacent to the campus of East Carolina University, for $50.0 million in cash, The District on 5th, within walking distance of the University of Arizona, for $66.4 million in cash, Campus Village, adjacent to Michigan State University, for $20.9 million in cash, The Province, adjacent to Kent State University for $45.0 million in cash, and The Centre and The Suites at Overton Park, both adjacent to Texas Tech University, for a combined $25.5 million in cash and $48.5 million in assumed debt (see Note 4 to the accompanying consolidated financial statements);

• In June 2013, we sold College Grove collegiate community serving Middle Tennessee State University for net cash proceeds of approximately $20.2 million (see Note 5 to the accompanying consolidated financial statements);

• In the third quarter of 2013, we purchased The Cottages at Lindberg serving Purdue University and The Retreat at State College serving Pennsylvania State University for a combined $91.2 million in cash and purchased our joint venture partner's 10% noncontrolling interest in the collegiate housing community referred to as East Edge located near the University of Alabama for $6.9 million in cash (see Note 4 to the accompanying consolidated financial statements);

• In December 2013, we purchased The Varsity collegiate housing community serving University of Michigan for a purchase price of $54.0 million. We assumed $32.4 million of construction debt related to this acquisition (see Note 4 to the accompanying consolidated financial statements);

• In December 2013, we sold The Pointe at Western collegiate housing community located in Kalamazoo, Michigan for a net cash proceeds of $20.0 million after closing costs (see Note 5 of the accompanying consolidated financial statements);

• We are investing in a joint venture to develop a collegiate housing property referred to as The Marshall at the University of Minnesota with our share of anticipated project costs of $47.0 million;

• We are investing in a joint venture to develop a collegiate housing property referred to as Georgia Heights at the University of Georgia with our share of anticipated project costs of $27.8 million;

• In 2013, we completed five development projects for our ownership with project costs of $192.4 million within walking distance of universities such as Arizona State University, University of Connecticut and University of Mississippi and directly on the campuses of University of Kentucky and the University of Texas at Austin;

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• We have eleven active development projects that we are developing for our ownership with anticipated aggregate project costs of $398.3 million within walking distance of universities such as the University of Colorado, University of Connecticut and Duke University and directly on the campus of University of Kentucky (see Note 4 to the accompanying consolidated financial statements);

• We entered into a presale agreement at Florida International University adjacent to Florida International University, in Miami, FL. The $43.5 million acquisition is subject to completion of the project in time for fall 2014 occupancy;

• Over the last three years we have improved our portfolio's median distance to edge of campus from 0.8 miles to 0.1 miles; and

• Over the last three years, including communities in our development pipeline, we have increased our average rental rate from $410 to $624 per bed.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to asset repositioning and capital recycling.

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 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 financial statements, giving due consideration to materiality. 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. For a discussion of our significant accounting policies, see Note 2 of the consolidated financial statements included in Exhibit 99.1 of this Form 8-K.

Collegiate housing leasing revenue recognition

Collegiate housing leasing revenue is comprised of all revenues related to the leasing activities at our collegiate housing communities and includes revenues from leasing apartments by the bed, food services, parking space rentals and certain ancillary services.

Students are required to execute lease contracts with payment schedules that vary from per semester to monthly. Generally, a parental guarantee must accompany each executed contract. Receivables are recorded when due, while leasing revenue and related lease incentives/concessions and nonrefundable application and service fees are recognized on a straight-line basis over the term of the contracts. Balances are considered past due when payment is not received on the contractual due date. Allowances for doubtful accounts are established by management when it is determined that collection is doubtful.

Revenue and cost recognition of development consulting services

Costs associated with the pursuit of third-party development consulting contracts are expensed as incurred until such time as we have been notified of a contract award or reimbursement that has been otherwise guaranteed by the customer. At such time, the reimbursable portion of such costs is recorded as a receivable. Development consulting revenues are recognized using the percentage of completion method as determined by construction costs incurred relative to the total estimated construction costs. Occasionally, our development consulting contracts include a provision whereby we can participate in project savings resulting from our successful cost management efforts. We recognize these revenues once all contractual terms have been satisfied and we have no future performance requirements. This typically occurs after construction is complete. Costs associated with development consulting services are expensed as incurred. We generally receive a significant percentage of our fees for development consulting services upon closing of the project financing, a portion of the fee over the construction period and the balance upon substantial completion of construction. Because revenue from these services is recognized for financial reporting purposes utilizing the percentage of completion method, differences occur between amounts received and revenues recognized. Differences also occur between amounts recognized for tax purposes and those recognized for financial reporting purposes.

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We also periodically enter into joint venture arrangements whereby we provide development consulting services to third-party collegiate housing owners in an agency capacity. We recognize our portion of the earnings in each joint venture based on our ownership interest, which is reflected after net operating income in our condensed consolidated statement of operations as equity in earnings (losses) of unconsolidated entities. Our revenue and operating expenses could fluctuate from period to period based on the extent to which we utilize joint venture arrangements to provide third-party development consulting services.

Collegiate housing property acquisitions and dispositions

Land, land improvements, buildings and improvements and furniture, fixtures and equipment are recorded at cost. Buildings and improvements are depreciated over 15 to 40 years, land improvements are depreciated over 15 years and furniture, fixtures, and equipment are depreciated over 3 to 7 years. Depreciation is computed using the straight-line method for financial reporting purposes.

Results of operations for acquired collegiate housing communities are included in EROP’s results of operations from the respective dates of acquisition. Appraisals, estimates of cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, land improvements, buildings and improvements, furniture, fixtures and equipment and identifiable intangibles such as amounts related to in-place leases. EROP recognizes pre-acquisition costs, which include legal and professional fees and other third-party costs related directly to the acquisition of a community when they are incurred.

Management assesses impairment of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management uses an estimate of future undiscounted cash flows of the related asset based on its intended use to determine whether the carrying value is recoverable. If we determine that the carrying value of an asset is not recoverable, the fair value of the asset is estimated and an impairment loss is recorded to the extent the carrying value exceeds estimated fair value (see Note 2 to the accompanying consolidated financial statements). Management estimates fair value using discounted cash flow models, market appraisals if available, and other market participant data.

When a collegiate housing community has met the criteria to be classified as held for sale, the fair value less cost to sell such asset is estimated. If fair value less cost to sell the asset is less than the carrying amount of the asset, an impairment charge is recorded for the estimated loss. Depreciation expense is no longer recorded once a collegiate housing community has met the held for sale criteria. The related carrying value of the community is recorded as held for sale in the accompanying consolidated balance sheet and operations of collegiate housing communities that are sold or classified as held for sale are recorded as part of discontinued operations for all periods presented.

Repairs and maintenance

The costs of ordinary repairs and maintenance are charged to operations when incurred. Major improvements that extend the life of an asset beyond one year are capitalized and depreciated over the remaining useful life of the asset. Planned major repair, maintenance and improvement projects are capitalized when performed. In some circumstances, the lenders require us to maintain a reserve account for future repairs and capital expenditures. These amounts are not available for current use and are recorded as restricted cash on our accompanying consolidated balance sheets.

Use of estimates

Significant estimates and assumptions are used by management in determining the recognition of third-party development consulting revenue under the percentage of completion method, useful lives of collegiate housing assets, the valuation of goodwill, the initial valuations and underlying allocations of purchase price in connection with collegiate housing property acquisitions, the determination of fair value for impairment assessments and in recording the allowance for doubtful accounts. Actual results could differ from those estimates.

We review our assets, including our collegiate housing communities, communities under development and goodwill for potential impairment indicators whenever events or circumstances indicate that the carrying value might not be recoverable. Impairment indicators include, but are not limited to, declines in our market capitalization, overall market factors, changes in cash flows, significant decreases in net operating income and occupancies at our operating properties, changes in projected completion dates of our development projects and sustainability of development projects. Our tests for impairment are based on the most current information available and if conditions change or if our plans regarding our assets change, it could result in

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additional impairment charges in the future. However, based on our plans with respect to our operating properties and those under development, we believe the carrying amounts are recoverable.

Results of Operations for the Years Ended December 31, 2013 and 2012

The following table presents our results of operations for the years ended December 31, 2013 and 2012 (amounts in thousands):

		Year ended December 31,
		2013			2012			Change ($)			Change (%)
Collegiate Housing Leasing:
	Collegiate housing leasing revenue	$	167,476		$	124,087		$	43,389		35.0	%
	Student housing leasing operations	79,957			59,524			20,433			34.3	%
	Net operating income	$	87,519		$	64,563		$	22,956		35.6	%
Development Consulting Services:
	Third-party development consulting services	$	3,759		$	1,018		$	2,741		269.3	%
	General and administrative	4,027			3,528			499			14.1	%
	Net operating loss	$	(268	)	$	(2,510	)	$	2,242		(89.3	)%
Management Services:
	Third-party management services	$	3,697		$	3,446		$	251		7.3	%
	General and administrative	2,450			2,779			(329		)	(11.8	)%
	Net operating income	$	1,247		$	667		$	580		87.0	%
Reconciliations:
	Segment revenue	$	174,932		$	128,551		$	46,381		36.1	%
	Operating expense reimbursements	10,214			9,593			621			6.5	%
	Eliminations / adjustments(1)	(770		)	(198		)	(572		)	288.9	%
	Total revenues	$	184,376		$	137,946		$	46,430		33.7	%
	Segment operating expenses	$	86,434		$	65,831		$	20,603		31.3	%
	Reimbursable operating expenses	10,214			9,593			621			6.5	%
	Eliminations / adjustments(1)	—			(44		)	44			(100.0	)%
	Total operating expenses	$	96,648		$	75,380		$	21,268		28.2	%
	Segment net operating income	$	87,728		$	62,566		$	25,162		40.2	%
	Other unallocated general and administrative expenses	(7,678		)	(7,913		)	235			(3.0	)%
	Depreciation and amortization	(48,098		)	(33,240		)	(14,858		)	44.7	%
	Ground lease	(7,622		)	(6,395		)	(1,227		)	19.2	%
	Nonoperating expenses	(18,837		)	(15,322		)	(3,515		)	22.9	%
	Equity in earnings (losses) of unconsolidated entities	(203		)	(363		)	160			(44.1	)%
	Income (loss) before income taxes and discontinued operations	$	5,290		$	(667	)	$	5,957		(893.1	)%
	(1) The eliminations / adjustments to segment revenues eliminate the deferred development fee on the participating project at the Science + Technology Park at Johns Hopkins, which is not recognized in the accompanying consolidated financial statements. The eliminations / adjustments to segment expenses eliminate internal development costs incurred relating to the development services on the participating project.

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Collegiate housing leasing

Collegiate housing operating statistics for owned communities and same-communities for the years ended December 31, 2013 and 2012 were as follows:

	Year Ended December 31, 2013(9)			Year Ended December 31, 2012(9)			Favorable (Unfavorable)
Owned communities:
Occupancy
Physical(1)	90.3		%	90.9		%	(60) bps
Economic(2)	86.4		%	87.5		%	(110) bps
NarPAB(3)	$	513		$	477		$	36
Other income per avail. bed(4)	$	42		$	36		$	6
RevPAB(5)	$	555		$	513		$	42
Operating expense per bed(6)	$	265		$	246		$	(19	)
Operating margin(7)	52.3		%	52.0		%	30 bps
Design Beds(8)	301,636			242,122			59,514
Same-communities(10):
Occupancy
Physical(1)	90.1		%	91.4		%	(130) bps
Economic(2)	85.3		%	87.0		%	(170) bps
NarPAB(3)	$	475		$	468		$	7
Other income per avail. bed(4)	$	31		$	32		$	(1	)
RevPAB(5)	$	506		$	500		$	6
Operating expense per bed(6)	$	249		$	239		$	10
Operating margin(7)	51.0		%	52.3		%	(130) bps
Design Beds(8)	222,494			222,494			—

(1)Represents a weighted average of the month-end occupancies for the respective period.

(2)Represents the effective occupancy calculated by taking net apartment rent accounted for on a GAAP basis for the respective period divided by market rent for the respective period.

(3)Net apartment rent per available bed ("NarPAB") represents GAAP net apartment rent for the respective period divided by the sum of the design beds in the portfolio for each of the included periods.

(4)Represents other GAAP-based income for the respective period divided by the sum of the design beds in the portfolio for each of the included months. Other income includes service/application fees, late fees, termination fees, parking fees, transfer fees, damage recovery, utility recovery and other miscellaneous fees.

(5)Revenue per available bed ("RevPAB")represents total revenue (net apartment rent plus other income) for the respective period divided by the sum of the design beds in the portfolio for each of the included periods.

(6)Represents property-level operating expense excluding management fees, depreciation and amortization and ground/facility lease fees divided by the sum of the design beds for each of the included periods.

(7)Represents operating income divided by revenue.

(8)Represents the sum of the monthly design beds in the portfolio during the period. Design beds are total beds (including staff and model beds) in the portfolio.

(9)This information excludes property information related to discontinued operations.

(10)Represents operating statistics for communities that were owned by us and were operating for the full years ended December 31, 2013 and 2012.

Total revenue in the collegiate housing leasing segment was $167.5 million for the year ended December 31, 2013. This represents an increase of $43.4 million, or 35.0%, from the same period in 2012. This increase included $42.0 million of revenue related to 18 new communities, which increased the portfolio to nearly 28,000 beds, and $1.4 million of revenue from a 1.2% increase in same-community revenue. The same-community revenue growth includes essentially flat revenue from the previous lease term then ended in July 2013 and a 5% increase in revenue from the current lease term that started in August. The growth in revenue for the 2013-2014 lease term included a 2.7% increase in net rental rates and a 2.5% improvement in occupancy, partially offset by a 0.3% decline in other income.

Operating expenses in the collegiate housing leasing segment increased $20.4 million, or 34.3%, to $80.0 million for the year ended December 31, 2013 as compared to the same period in 2012. The 18 new communities added $18.2 million of operating

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expenses over the same period in the prior year. In addition, same-community operating expenses increased $2.2 million, or 4.2%, over the same period in the prior year.

Development consulting services

The following table represents the development consulting projects that were active during the years ended December 31, 2013 and 2012:

			Segment Revenues
Project	Beds	Fee Type	2013		2012		Difference
			(in thousands)
Centennial Hall	454	Development fee	$	—	$	182	$	(182	)
West Chester University of Pennsylvania – Phase II	653	Development fee	934		—		934
East Stroudsburg University of Pennsylvania – Phase II	488	Development fee	—		136		(136		)
Mansfield University of Pennsylvania	634	Development fee	—		35		(35		)
Mansfield University of Pennsylvania – Phase II	684	Development fee	1,361		417		944
Wichita State University	784	Development fee	614		—		614
Miscellaneous consulting fees	—	Consulting fee	80		50		30
Third-party development consulting services total			2,989		820		2,169
Participating project – Science + Technology Park at Johns Hopkins	572	Development fee	770		198		572
Development consulting services total			$	3,759	$	1,018	$	2,741

Development consulting services revenue increased $2.7 million to $3.8 million for the year ended December 31, 2013 as compared to the same period in 2012. As disclosed in the table above, third-party development consulting revenue increased $2.2 million primarily due to continued progress on the Mansfield University of Pennsylvania - Phase II project. Also in 2013, EROP began development consulting and construction oversight services on the projects at West Chester University of Pennsylvania - Phase II and Wichita State University, which contributed to the total increase in development consulting services revenue from 2012. The Science + Technology Park at Johns Hopkins (see Note 2 to the accompanying consolidated financial statements) contributed $0.6 million to the increase in development revenue due to the participation in project savings resulting from successful cost management efforts. Because EROP is guaranteeing the construction loan and extending a second mortgage to the development with an initial fixed interest rate of 10%, all revenue on the project is being deferred in the accompanying consolidated financial statements until the second mortgage is repaid and EROP no longer guarantees the debt. Since management considers these fees when assessing the performance of the segment, they are included in the segment revenue above and eliminated in the segment revenue reconciliations. If the construction loan and second mortgage had been repaid prior to December 31, 2013, EROP would have recognized development services revenue net of costs of $2.6 million (including participation in cost savings of $0.8 million), guarantee fee revenue of $3.0 million and interest income of $5.6 million since the commencement of the project. We anticipate the repayment of the $18.0 million second mortgage loan made to the Johns Hopkins participating development during 2014. If this occurs we would recognize the deferred development fees, deferred interest income, and the guarantee fee at that time.

General and administrative expenses for the segment increased $0.5 million, or 14.1%, for the year ended December 31, 2013 compared to the prior year. This increase is primarily attributable to the increase in active development projects. Internal development project costs related to the Science + Technology Park at Johns Hopkins Medical Institute discussed above are deferred in the accompanying condensed consolidated financial statements until revenue associated with this project is recognized. As such, these expenses are eliminated in the reconciliation of segment operating expenses of the segment financial statements.

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Management services

Total management services revenue increased $0.3 million, or 7.3%, for the year ended December 31, 2013 when compared to the same period in 2012. This increase is due to the management contract for the Science + Technology Park at Johns Hopkins discussed above, for which development was completed in August of 2012, and we received a full year of management fees in 2013, and a net increase in fees from existing contracts offset by the loss of two management contracts, one of which EROP chose to terminate.

General and administrative expenses for our management services segment decreased $0.3 million, or 11.8%, for the year ended December 31, 2013 compared to the same period in the prior year primarily due to the leveraging of our management services department as we increase the communities in our combined portfolio.

Other unallocated general and administrative expenses

Other unallocated general and administrative expenses decreased $0.2 million, or 3.0%, during the year ended December 31, 2013 over the same period in the prior year primarily due to efficiencies gained in association with the growth of our owned portfolio.

Depreciation and amortization

Depreciation and amortization increased $14.9 million, or 44.7%, during the year ended December 31, 2013 over the same period in the prior year. This increase relates primarily to the 18 new properties (acquisitions or developments) opened since January 1, 2012 as discussed above.

Ground lease expense

For the year ended December 31, 2013, the cost of ground leases increased $1.2 million or 19.2%, compared to the same period in the prior year, due to the opening of Campus West at Syracuse University in the fall of 2012, the acquisition of Campus Village at Michigan State University in the fourth quarter of 2012, the increase in ground lease expense at the GrandMarc at Westberry Place at Texas Christian University during 2013, and the opening of 2400 Nueces at the University of Texas at Austin and Central Hall I & II at the University of Kentucky in the fall of 2013. EROP owns and operates the 2400 Nueces and Central Hall I & II communities under long-term ground leases with the respective universities. The ground lease on the GrandMarc at Westberry Place community is subject to a 53-year ground lease with a fixed-floor annual rent increase. We recognize ground lease expense on a straight-line basis over the life of the lease.

Nonoperating expenses

For the year ended December 31, 2013, nonoperating expenses increased $3.5 million, or 22.9%, as compared to the same period in the prior year. This increase relates primarily to a $3.1 million increase in interest expense associated with the increase in net borrowings on the Fourth Amended Revolver (as defined below) of $277.9 million during 2013.

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Results of Operations for the Years Ended December 31, 2012 and 2011

The following table presents our results of operations for the years ended December 31, 2012 and 2011 (amounts in thousands):

		Year ended December 31,
		2012			2011			Change ($)			Change (%)
Collegiate Housing Leasing:
	Collegiate housing leasing revenue	$	124,087		$	91,517		$	32,570		35.6	%
	Student housing leasing operations	59,524			44,892			14,632			32.6	%
	Net operating income	$	64,563		$	46,625		$	17,938		38.5	%
Development Consulting Services:
	Third-party development consulting services	$	1,018		$	5,682		$	(4,664	)	(82.1	)%
	General and administrative	3,528			2,998			530			17.7	%
	Net operating income (loss)	$	(2,510	)	$	2,684		$	(5,194	)	(193.5	)%
Management Services:
	Third-party management services	$	3,446		$	3,336		$	110		3.3	%
	General and administrative	2,779			2,667			112			4.2	%
	Net operating income	$	667		$	669		$	(2	)	(0.3	)%
Reconciliations:
	Segment revenue	$	128,551		$	100,535		$	28,016		27.9	%
	Operating expense reimbursements	9,593			8,604			989			11.5	%
	Eliminations / adjustments(1)	(198		)	(1,579		)	1,381			(87.5	)%
	Total revenues	$	137,946		$	107,560		$	30,386		28.3	%
	Segment operating expenses	$	65,831		$	50,557		$	15,274		30.2	%
	Reimbursable operating expenses	9,593			8,604			989			11.5	%
	Eliminations / adjustments(1)	(44		)	(75		)	31			(41.3	)%
	Total operating expenses	$	75,380		$	59,086		$	16,294		27.6	%
	Segment net operating income	$	62,566		$	48,474		$	14,092		29.1	%
	Other unallocated general and administrative expenses	(7,913		)	(6,726		)	(1,187		)	17.6	%
	Depreciation and amortization	(33,240		)	(23,858		)	(9,382		)	39.3	%
	Ground lease	(6,395		)	(5,498		)	(897		)	16.3	%
	Nonoperating expenses	(15,322		)	(18,647		)	3,325			(17.8	)%
	Equity in earnings (losses) of unconsolidated entities	(363		)	(447		)	84			(18.8	)%
	Loss before income taxes and discontinued operations	$	(667	)	$	(6,702	)	$	6,035		(90.0	)%
	(1) The eliminations / adjustments to segment revenues eliminate the deferred development fee on the participating project at the Science + Technology Park at Johns Hopkins, which is not recognized in the accompanying consolidated financial statements. The eliminations / adjustments to segment expenses eliminate internal development costs incurred relating to the development services on the participating project.

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Collegiate housing leasing

Collegiate housing operating statistics for owned communities and same-communities for the years ended December 31, 2012 and 2011 were as follows:

	Year Ended December 31, 2012(9)			Year Ended December 31, 2011(9)			Favorable (Unfavorable)
Owned communities:
Occupancy
Physical(1)	90.9		%	91.8		%	(90) bps
Economic(2)	87.5		%	87.8		%	(30) bps
NarPAB(3)	$	477		$	430		$	47
Other income per avail. bed(4)	$	36		$	26		$	10
RevPAB(5)	$	513		$	456		$	57
Property operating expense per bed(6)	$	246		$	224		$	22
Operating margin(7)	52.0		%	50.9		%	110 bps
Design Beds(8)	242,122			200,783			41,339
Same communities(10):
Occupancy
Physical(1)	92.0		%	93.2		%	(120) bps
Economic(2)	88.0		%	88.4		%	(40) bps
NarPAB(3)	$	435		$	417		$	18
Other income per avail. bed(4)	$	26		$	25		$	1
RevPAB(5)	$	461		$	442		$	19
Property operating expense per bed(6)	$	232		$	223		$	(9	)
Operating margin(7)	49.7		%	49.4		%	30 bps
Design Beds(8)	185,729			185,729			$	—

(1) Represents a weighted average of the month-end occupancies for the respective period.

(2) Represents the effective occupancy calculated by taking net apartment rent accounted for on a GAAP basis for the respective period divided by market rent for the respective period.

(3) Represents GAAP net apartment rent for the respective period divided by the sum of the design beds in the portfolio for each of the included periods.

(4) Represents other GAAP-based income for the respective period divided by the sum of the design beds in the portfolio for each of the included periods. Other income includes service/application fees, late fees, termination fees, parking fees, transfer fees, damage recovery, utility recovery and other miscellaneous fees.

(5) Represents total revenue (net apartment rent plus other income) for the respective period divided by the sum of the design beds in the portfolio for each of the included periods.

(6) Represents property-level operating expense excluding management fees, depreciation and amortization and ground/facility lease fees divided by the sum of the design beds for each of the included periods.

(7) Represents operating income divided by revenue.

(8) Represents the sum of the monthly design beds in the portfolio during the period. Design beds are total beds (including staff and model beds) in the portfolio.

(9) This information excludes property information related to discontinued operations.

(10) Represents operating statistics for communities that were operating for the full years ended December 31, 2012 and 2011.

Total revenue in the collegiate housing leasing segment was $124.1 million for the year ended December 31, 2012, an increase of $32.6 million, or 35.6%, from the same period in 2011. This increase included $29.0 million related to the properties acquired during 2011 and 2012 or properties under development that opened in the fall of 2012, and $3.5 million from a 4.3% increase in same-community revenue. The same-community revenue growth was driven by a 5.3% increase in net rental rates, a 1.3% decline in occupancies, and a 0.3% increase in other rental revenue.

Operating expenses in the collegiate housing leasing segment increased $14.6 million, or 32.6%, to $59.5 million for the year ended December 31, 2012 as compared to the same period in 2011. The properties acquired during 2011 and 2012 or properties under development that opened in the fall of 2012 added $13.0 million of operating expenses over the prior year. In addition, same-community operating expenses increased $1.6 million, or 3.9%, over the same period in the prior year.

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Development consulting services

The following table represents the development consulting projects that were active during the years ended December 31, 2012 and 2011:

		Segment Revenues
Project	Beds	2012		2011		Difference
		(in thousands)
Indiana University of Pennsylvania Phase IV	596	$	—	$	456	$	(456	)
Colorado State University – Pueblo II	500	—		1		(1		)
Centennial Hall	454	182		273		(91		)
East Stroudsburg University	969	136		1,886		(1,750		)
Mansfield University of Pennsylvania	634	35		1,362		(1,327		)
Mansfield University of Pennsylvania Phase II	684	417		—		417
Miscellaneous consulting fees	—	50		125		(75		)
Third-party development consulting services total		820		4,103		(3,283		)
Participating project – Science + Technology Park at Johns Hopkins	572	198		1,579		(1,381		)
Development consulting services total		$	1,018	$	5,682	$	(4,664	)

Development consulting services revenue decreased $4.7 million, or 82.1%, to $1.0 million for the year ended December 31, 2012 as compared to the same period in 2011. Third-party development consulting revenue decreased $3.3 million from the prior year due to less development activity on two active third-party development consulting projects offset by $0.5 million of revenue related to the Mansfield University of Pennsylvania - Phase II project which was begun in the third quarter of 2012. The Science + Technology Park at Johns Hopkins (see Note 2 to the accompanying consolidated financial statements) contributed $1.4 million to the decline in revenue as the project was completed early in third quarter of 2012. Due to the fact EROP is guaranteeing the construction loan and extending a second mortgage to the development, all revenue on the project is being deferred in the accompanying consolidated financial statements until the second mortgage is repaid and EROP no longer guarantees the debt. Since management considers these fees when assessing the performance of the segment, they are included in the segment revenue above and eliminated in the segment revenue reconciliations. If the construction loan and second mortgage had been repaid prior to December 31, 2012, EROP would have recognized development services revenue net of costs of $1.9 million, guarantee fee revenue of $3.0 million and interest income of $3.8 million since the commencement of the project.

General and administrative expenses for the segment increased $0.5 million, or 17.7%, for the year ended December 31, 2012 compared to the same period in the prior year. This increase is primarily due to additional payroll costs, net of capitalized payroll on owned developments, related to the increased development activity. Internal development project costs related to the Science + Technology Park at Johns Hopkins discussed above are deferred in the accompanying consolidated financial statements until the revenue associated with this project is recognized. As such, these expenses are included in the segment operating expenses above and eliminated in the segment operating expense reconciliations.

Management services

Total management services revenue increased $0.1 million, or 3.3%, for the year ended December 31, 2012 when compared to the same period in 2011. Existing contracts produced a net increase in fee revenue and five additional contracts, including one community for which development was completed in the fourth quarter of 2011 and four new management contracts added in 2012, further contributed to the increase, which was offset by the loss of three management contracts associated with the sales of the communities.

General and administrative costs for our management services segment increased $0.1 million, or 4.2% for the year ended December 31, 2012 compared to the same period in the prior year primarily due to the growth of the company.

Other unallocated general and administrative expenses

Other unallocated general and administrative expenses increased $1.2 million, or 17.6%, during the year ended December 31, 2012 over the same period in the prior year primarily due to costs associated with the growth of our owned portfolio.

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Depreciation and amortization

Depreciation and amortization increased $9.4 million, or 39.3%, during the year ended December 31, 2012 over the same period in the prior year. This increase relates mainly to the purchase of 17 new properties since January 1, 2011 as discussed above.

Ground lease expense

For the year ended December 31, 2012, the cost of ground leases increased $0.9 million, or 16.3%, compared to the same period in the prior year, due to the addition of GrandMarc at Westberry place at Texas Christian University in the fourth quarter of 2011. This community is subject to a 53-year ground lease with a fixed-floor annual rent increase. EROP recognizes ground lease expense on a straight-line basis over the life of the lease.

Nonoperating expenses

For the year ended December 31, 2012, nonoperating expenses decreased $3.3 million, or 17.8%, as compared to the same period in the prior year. Interest expense decreased $2.9 million primarily related to the capitalization of interest in our eleven owned development projects and an $11.2 million net reduction in mortgage and construction debt since December 31, 2011 excluding debt of $48.5 million that was assumed in December 2012 (see Note 10 to the accompanying consolidated financial statements). Also contributing to the decrease was a loss on extinguishment of debt of $0.4 million taken in the first quarter of 2011 related to the repayment of $35.5 million of variable rate debt.

Equity in earnings (losses) of unconsolidated entities

Equity in earnings (losses) of unconsolidated entities represents our share of the net income or loss related to investments in unconsolidated entities that own collegiate housing communities. For the years ended December 31, 2012 and 2011 equity in losses was $0.4 million for both years.

Liquidity and Capital Resources

Fourth Amended Revolver

On January 14, 2013, EROP entered into a Fourth Amended and Restated Credit Agreement, which amended and restated the existing revolving credit facility dated September 21, 2011. The previous facility (the “Third Amended Revolver”) was secured, had a maximum availability of $175 million and was scheduled to mature on September 21, 2014. The Fourth Amended and Restated Credit Agreement is unsecured, had a maximum availability of $375 million and, within the first four years of the agreement, could be expanded to $500 million upon satisfaction of certain conditions. The Fourth Amended and Restated Credit Agreement was scheduled to mature on January 14, 2017.

On October 24, 2013, EROP entered into the First Amendment to the Fourth Amended Revolver (as amended, the "Fourth Amended Revolver"). The amendment increased the maximum borrowing capacity under the facility from $375 million to $500 million with an accordion feature to $700 million, which may be exercised during the first four years subject to satisfaction of certain conditions. The initial maturity date of the Fourth Amended Revolver is January 14, 2018, provided that EROP may extend the maturity date for one year subject to certain conditions.

Availability under the Fourth Amended Revolver, as amended, is limited to a “borrowing base availability” equal to the lesser of (i) 60% of the property asset value (as defined in the agreement) and (ii) the loan amount, which would produce a debt service coverage ratio of no less than 1.40. As of December 31, 2013, our borrowing base was $500.0 million, and we had $356.9 million outstanding under the Fourth Amended Revolver; thus, our remaining borrowing base availability was $143.1 million.

The Trust serves as the guarantor for any funds borrowed by EROP under the Fourth Amended Revolver. The interest rate per annum applicable to the Fourth Amended Revolver is, at EROP’s option, equal to a base rate or the London InterBank Offered Rate (“LIBOR”) plus an applicable margin based upon our leverage. As of December 31, 2013, the interest rate applicable to the Fourth Amended Revolver was 1.57%. If amounts are drawn, due to the fact that the Fourth Amended Revolver bears interest at variable rates, cost approximates the fair value.

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The Fourth Amended Revolver contains customary affirmative and negative covenants and contains financial covenants that, among other things, require EROP and its subsidiaries to maintain certain minimum ratios of EBITDA (earnings before payment or charges of interest, taxes, depreciation, amortization or extraordinary items) as compared to interest expense and total fixed charges. The financial covenants also include consolidated net worth and leverage ratio tests. In addition, the Trust is prohibited from making distributions in excess of 95% of funds from operations except to comply with the legal requirements to maintain the its status as a REIT. As of December 31, 2013, we were in compliance with all covenants of the Fourth Amended Revolver.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to credit facilities.

Mortgage and construction debt

As of December 31, 2013, EROP had outstanding mortgage and construction indebtedness of $420.4 million (excluding unamortized debt premium of $2.3 million). Of the total, $123.7 million and $69.7 million relates to variable rate construction and mortgage debt, respectively, that is described below, and $57.3 million pertains to outstanding mortgage debt that is secured by the underlying collegiate housing properties or leaseholds bearing interest at fixed rates ranging from 4.16% to 5.60%. The remaining $227.0 million pertains to fixed rate mortgage debt, including $47.7 million related to the purchase of The Suites at Overton Park and The Centre at Overton Park collegiate housing communities (see Note 10 to the accompanying consolidated financial statements). It also includes $9.6 million of debt that is secured by an underlying collegiate housing property bearing interest at a fixed rate of 4.92% and the remaining $169.7 million pertains to the Fannie Mae master secured credit facility that EROP entered into on December 31, 2008 and expanded on December 2, 2009 (the “Master Secured Credit Facility”), which bears interest at a weighted average fixed rate of 5.87%. EROP was in compliance with all financial covenants, including consolidated net worth and liquidity tests, contained in the Master Secured Credit Facility as of December 31, 2013.

Master Secured Credit Facility

The Master Secured Credit Facility was entered into on December 31, 2008 and expanded on December 2, 2009. All notes under the Master Secured Credit Facility contain cross-default provisions; all properties securing the notes are cross-collateralized. EROP was in compliance with all financial covenants, including consolidated net worth and liquidity tests, contained in the Master Secured Credit Facility as of December 31, 2013.

During 2013, EROP prepaid a $14.6 million, five-year note under the Master Secured Credit Facility. The debt had a fixed interest rate of 5.99% and was due to mature on January 1, 2014. Two collegiate housing communities, The Avenue at Southern and Carrollton Crossing, were released from the collateral pool simultaneously with the pay-off. The mortgage debt was repaid with proceeds received from borrowings under the Fourth Amended Revolver and cash on hand.

Mortgage debt

On the maturity date of July 1, 2013, EROP refinanced of the University Towers mortgage debt. The new mortgage debt has a principal balance of $34.0 million and an initial maturity date of July 1, 2016. The loan may be extended for two 12-month periods, after an extension fee of 0.20% on the then-outstanding principal is paid, and if the debt service coverage ratio calculated as of the preceding quarter is at least 1.30 to 1.0. The interest rate per year applicable to the loan is, at the option of EROP, equal to a prime rate plus a 0.50% margin or LIBOR plus a 2.10% margin and is interest only through July 1, 2015. The debt service coverage ratio is to be calculated quarterly on a trailing 12-month basis and is to be no less than 1.25 to 1.00, increasing to 1.30 to 1.0 commencing on September 30, 2016 and thereafter. Loan fees of $0.3 million were paid at closing. As of December 31, 2013, the interest rate applicable to the loan was 2.29%.

In December 2012, in connection with the acquisition of the Suites at Overton Park and the Centre at Overton Park collegiate housing communities, both of which are adjacent to Texas Tech University in Lubbock, Texas, EROP assumed $25.1 million and $23.3 million of fixed rate mortgage debt, respectively. The loan for the Suites at Overton Park bears interest at 4.2% and initially matures on April 1, 2016. The loan for the Centre at Overton Park bears interest at 5.6% and initially matures on January 1, 2017. If no event of default has occurred by the initial maturity dates EROP has the option to extend the maturity dates one year at a base rate plus a 2.5% margin. Principal and interest are paid on a monthly basis for both loans.

As of December 31, 2013, EROP had outstanding variable rate mortgage debt of $35.7 million that was assumed in connection with the acquisition of the GrandMarc at Westberry Place collegiate housing community located at Texas Christian University. The interest rate per year applicable to the loan is equal to a base rate plus a 4.85% margin, in total not to exceed 7.5% per year,

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and principal and interest are paid on a monthly basis. The loan matures on January 1, 2020. As of December 31, 2013, the interest rate applicable to the loan was 5.02%. In January 2014, this loan was prepaid in full (see Note 18 to the accompanying consolidated financial statements).

During the year ended December 31, 2012, EROP repaid in full $27.0 million of mortgage debt secured by the collegiate housing community referred to as The Lofts located near the University of Central Florida in Orlando, Florida. The debt had a fixed interest rate of 5.59% and was due to mature in May 2014. During the year ended December 31, 2012, EROP also repaid $10.2 million and $4.1 million on construction loans related to the development of a wholly-owned collegiate housing community near Southern Illinois University (The Reserve at Saluki Pointe-Carbondale). The loans bore interest equal to LIBOR plus 110 and 200 basis point margins, respectively, and were due to mature on June 28, 2012. The mortgage debt and construction loans were repaid with proceeds from the Third Amended Revolver and cash on hand.

During the year ended December 31, 2012, EROP repaid in full $34.0 million of mortgage debt secured by the collegiate housing community referred to as Campus Lodge located near the University of Florida in Gainesville, Florida. The debt had a fixed interest rate of 6.97%, an effective interest rate of 5.48% and was due to mature in May 2012. The mortgage debt was repaid with cash on hand.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to the repayment of mortgage loans.

Construction loans

In connection with the acquisition of The Varsity serving the University of Michigan (see Note 4) during the year ended December 31, 2013, EROP assumed a construction loan in the amount of $32.4 million. The interest rate per year applicable to the loan is equal to LIBOR plus a 2.25% margin and is interest only through August 1, 2015. As of December 31, 2013, the interest rate applicable to the loan was 2.42%. On August 1, 2015, if certain conditions for extension are met, EROP has the option to extend the loan until August 1, 2017. During the extension period, if applicable, principal and interest are to be repaid on a monthly basis.

As of December 31, 2013, EROP had borrowed $31.4 million on a construction loan related to the development of the first two phases of a wholly-owned collegiate housing community in Storrs, Connecticut (The Oaks on the Square - Phase I and II). The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.25% margin or LIBOR plus a 2.25% margin and is interest only through October 30, 2015. As of December 31, 2013, the interest rate applicable to the loan was 2.42%. On October 30, 2015, if certain conditions for extension are met, EROP has the option to extend the loan until October 31, 2016. On October 30, 2016, if certain conditions are met, EROP has the option to extend the loan until October 31, 2017. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis.

As of December 31, 2013, EROP had borrowed $0.2 million on a construction loan related to the development of the third phase of a wholly-owned collegiate housing community in Storrs, Connecticut (The Oaks on the Square - Phase III). The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 0.95% margin or LIBOR plus a 1.95% margin and is interest only through September 11, 2017. As of December 31, 2013, the interest rate applicable to the loan was 2.1%. On September 11, 2017, if certain conditions for extension are met, EROP has the option to extend the loan until September 11, 2018. On September 11, 2018, if certain conditions are met, EROP has the option to extend the loan until September 11, 2019. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis.

As of December 31, 2013, EROP had borrowed $27.1 million on a construction loan related to the development of a jointly owned collegiate housing community near the University of Mississippi (The Retreat at Oxford). EROP is the majority owner and managing member of the joint venture and began managing the community once it opened in August 2013. The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.10% margin or LIBOR plus a 2.10% margin and is interest only through June 12, 2015. As of December 31, 2013, the interest rate applicable to the loan was 1.97%. Once the project is complete and a debt service coverage ratio of not less than 1.30 to 1 is maintained, the interest rate will be reduced to a base rate plus a 0.80% margin or LIBOR plus a 1.80% margin at the option of EROP. If certain conditions for extension are met, EROP has the option to extend the loan twice for an additional year. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis.

As of December 31, 2013, EROP had borrowed $32.6 million on a construction loan related to the development of a jointly owned collegiate housing community near the Arizona State University - Downtown Phoenix campus (Roosevelt Point). EROP is the majority owner and managing member of the joint venture and began managing the community once it opened in August 2013. The loan bears interest equal to LIBOR plus a 225 basis point margin and is interest only through March 20, 2015. As of

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December 31, 2013, the interest rate applicable to the loan was 2.44%. On March 20, 2015, if the debt service ratio is not less than 1.35 to 1 and an extension fee of 0.25% of the total outstanding principal is paid to the lender, EROP may extend the loan until March 20, 2016. On March 20, 2016, if the debt service ratio is not less than 1.45 to 1 and an extension fee of 0.25% of the total outstanding principal is paid to the lender, EROP can extend the loan until March 20, 2017. During the first and second extension periods, if applicable, principal and interest are to be repaid on a monthly basis.

On December 23, 2013, EROP repaid in full $33.1 million of construction debt secured by the collegiate housing community referred to as East Edge located near the University of Alabama, in Tuscaloosa, Alabama. The construction loan bore interest equal to LIBOR plus a 240 basis point margin and was due to mature on July 1, 2014. The construction loan was repaid with proceeds from the Fourth Amended Revolver and cash on hand.

On December 23, 2013, EROP also repaid in full $12.3 million of construction debt secured by the collegiate housing community referred to as Campus West located near Syracuse University, in Syracuse, New York. The construction loan bore interest equal to LIBOR plus a 195 basis point margin and was due to mature on December 7, 2014. The construction loan was repaid with proceeds from the Fourth Amended Revolver and cash on hand.

On September 27, 2013, EROP repaid in full $8.4 million of construction debt secured by the collegiate housing community referred to as University Village Apartments on Colvin located near Syracuse University, in Syracuse, New York. The construction loan bore interest equal to LIBOR plus a 110 basis point margin and was due to mature on September 29, 2013. The construction loan was repaid with proceeds from the Fourth Amended Revolver and cash on hand.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to the repayment of construction loans.

Liquidity outlook and capital requirements

During the year ended December 31, 2013, we generated $77.4 million of cash from operations, received net proceeds of $16.9 million from the issuance of units to the Trust in connection with the Trust's at-the-market equity distribution program, received proceeds of $40.2 million related to the sale of two collegiate housing communities, borrowed $90.1 million on mortgage and construction loans and borrowed a net $277.9 million on the Fourth Amended Revolver. When combined with $17.0 million of existing cash, we were able to invest $17.2 million of capital into existing communities, acquire three communities for an aggregate of $109.5 million, invest $9.5 million in joint ventures, repay $97.9 million of mortgage and construction debt, invest $215.4 million in assets under development and distribute $48.0 million to our unitholders in order to end the year with approximately $22.1 million in cash.

Our short-term liquidity needs include funds for distributions to our unitholders, including those required to maintain the Trust's REIT status and satisfy our current annual distribution target of $0.44 per unit, funds for capital expenditures, funds for debt repayment and, potentially, funds for new property acquisition and development. We generally expect to meet our short-term liquidity requirements through cash provided by operations, debt refinancing, existing cash, recycling capital through potential asset sales. We believe that these sources of capital will be sufficient to provide for our short-term capital needs. Starting in May of 2013, the valuation of REIT stocks, including the Trust, started to decline and stayed suppressed through the remainder of 2013. These reduced valuations have increased our cost of capital and made access to equity markets unfavorable at the current time. We have managed our balance sheet so that all capital needs, including announced and committed development deals, are pre-funded by our balance sheet capacity. If the current conditions in the equity markets persist and we did not access the capital markets over the next two years, our debt as a percentage of gross assets at the end of 2015 would increase from the current 42.8% to approximately 47%, which is higher than we would prefer but within an acceptable range. At the same time our Interest Coverage ratios (Adjusted EBITDA (as further defined below) to interest expense) and Net Debt to EBITDA - Adjusted ratios would remain basically at current levels. Net Debt to EBITDA - Adjusted is defined as net debt (debt excluding unamortized premiums, cash, and non-producing construction debt on assets under development as of the date of the calculation) to Adjusted EBITDA (as further defined below) including proforma adjustments to reflect all acquisitions and development assets that are opened as if such had occurred at the beginning of the 12 month period being presented.

Distributions for the year ended December 31, 2013 totaled $48.5 million, or $0.42, per weighted average unit, compared to cash provided by operations of $77.4 million, or $0.67, per weighted average unit.

Based on the Trust's closing share price of $8.82 on December 31, 2013, our total enterprise value was $1.8 billion. With net debt (total debt less cash) of $755.2 million as of December 31, 2013, our debt to enterprise value was 42.5% compared to 27.4% as of December 31, 2012. With gross assets of $1.8 billion, which excludes accumulated depreciation of $204.2 million, our debt to gross assets ratio was 42.8% as of December 31, 2013 as compared to 31.7% as of December 31, 2012.

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Management believes that it has strengthened EROP’s balance sheet through the follow-on equity offerings by the Trust in August of 2012 and January and November of 2011, selling 17.3 million shares, 13.2 million shares and 14.4 million shares of common stock, respectively, all inclusive of the underwriters’ overallotment option to purchase additional shares, for net proceeds of $180.9 million, $91.7 million and $124.4 million, respectively. The proceeds were contributed to EROP and a portion of the net proceeds was used to repay approximately $117.1 million of debt with the remaining proceeds used to fund current developments and acquisitions, fund future acquisitions and developments and for general corporate purposes.

On September 7, 2012, the Trust filed an automatic shelf registration statement, which permits the Trust to issue an unlimited number of securities, including equity or debt securities, from time to time in one or more transactions, depending on market conditions and terms. As discussed in Note 2 to the accompanying consolidated financial statements, the Trust has utilized at-the-market equity distribution programs since 2010, selling an aggregate of 12.4 million shares of common stock for net proceeds of approximately $116.3 million, including 1.6 million shares for net proceeds of approximately $17.8 million under the 2012 equity distribution program. We have used and are using the net proceeds to repay debt, fund our development pipeline, fund potential future acquisitions and for general corporate purposes. Under the 2012 distribution program, the Trust may issue and sell shares of its common stock having an aggregate offering amount of $50 million.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to equity offerings.

Acquisition, disposition and development activity

An additional source of capital, subject to appropriate market conditions, is the targeted disposition of non-strategic properties. We continually assess all of our communities, the markets in which they are located and the colleges and universities they serve, to determine if any dispositions are necessary or appropriate. The net proceeds from the sale of any asset would provide additional capital that would most likely be used to pay down debt and possibly finance acquisition/development growth or other operational needs.

In the second quarter of 2013, we completed the sale of College Grove, located in Murfreesboro, Tennessee for an aggregate sales price of $20.7 million (see Note 5 to the accompanying consolidated financial statements). The net proceeds of $20.2 million were used to fund development and acquisition activity and for general working capital purposes.

In the fourth quarter of 2013, we completed the sale of The Pointe at Western collegiate housing community located in Kalamazoo, Michigan for a sales price of $21.0 million (see Note 5 to the accompanying consolidated financial statements). EROP received proceeds of $20.0 million after closing costs.

We intend to invest in additional communities only as suitable opportunities arise. We also plan to develop communities for our ownership and management. In the short term, we intend to fund any acquisitions or developments with working capital, borrowings under first mortgage property secured debt, construction loans or borrowings under our Fourth Amended Revolver. We intend to finance property acquisitions and development projects over the longer term with cash from operations, the proceeds from potential asset sales, private capital in the form of joint ventures, debt financing and issuances of units in EROP. There can be no assurance, however, that such funding will be obtained on reasonable terms, or at all, particularly in light of current capital market conditions.

In the third quarter of 2013, we completed the purchase of The Cottages at Lindberg serving Purdue University and The Retreat at State College serving Pennsylvania State University for a combined purchase price of $91.2 million. EROP also purchased our joint venture partner's 10% noncontrolling interest in the collegiate housing community referred to as East Edge located near the University of Alabama for $6.9 million in cash. EROP now owns 100% of the community. EROP funded these acquisitions with proceeds from the sale of College Grove discussed above and with borrowings under the Fourth Amended Revolver (see Note 5 to the accompanying consolidated financial statements).

In the fourth quarter of 2013, we completed the purchase of the 415-bed community, The Varsity, serving the University of Michigan for $54.0 million. EROP funded this acquisition with assumed debt of $32.4 million and proceeds from draws on our Fourth Amended Revolver (see Note 4 to the accompanying consolidated financial statements).

We entered into a presale agreement at Florida International University adjacent to Florida International University, in Miami, FL. The $43.5 million acquisition is subject to completion of the project in time for fall 2014 occupancy. The purchase of the community is contingent upon on-time completion of the project.

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We have eleven active development projects that we are developing for our ownership with our share of aggregate development costs of $398.3 million. As of December 31, 2013, $111.7 million of the anticipated costs had been incurred and funded.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to acquisition, disposition and development activity.

Predevelopment expenditures

Our third-party development consulting activities have historically required us to fund predevelopment 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. However, we typically obtain a guarantee of repayment of these predevelopment expenditures from the project owner, but no assurance can be given that we would be successful in collecting the amount guaranteed in the event that project financing is not obtained. When we develop projects for ownership, as opposed to our third-party development services, EROP bears all exposure to risks and capital requirements for these developments.

Long-term liquidity requirements

Our long-term liquidity requirements consist primarily of funds necessary for scheduled debt maturities, acquisitions, developments, renovations and other non-recurring capital expenditures that are needed periodically for our communities. We expect to meet these needs through existing working capital, cash provided by operations, additional borrowings under our Fourth Amended Revolver, net proceeds from potential asset sales, the issuance of equity securities by the Trust, including common or preferred stock of the Trust, units in EROP or additional debt, if market conditions permit. In January 2014, we entered into a $187.5 million unsecured term loan with five- and seven-year tranches (the "Unsecured Term Loan") (see Note 18 to the accompanying consolidated financial statements included in Exhibit 99.1 of this Form 8-K). At the same time, we entered into interest rate swap agreements to effectively fix the interest rate. We believe these sources of capital will be sufficient to provide for our long-term capital needs. Market conditions, however, may make additional capital more expensive for us. There can be no assurance that we will be able to obtain additional financing under satisfactory conditions, or at all, or that we will make any investments in additional communities. Our Fourth Amended Revolver is a material source to satisfy our long-term liquidity requirements. As such, compliance with the financial and operating debt covenants is material to our liquidity. As of December 31, 2013, we were in compliance with all covenants related to our Fourth Amended Revolver.

Capital expenditures

The historical recurring capital expenditures, excluding discontinued operations, at our wholly-owned communities are set forth as follows:

	As of and for the Years Ended December 31,
	2013		2012		2011
Total units	5,895		5,044		4,820
Total beds	18,508		16,119		15,477
Total recurring capital expenditures (in thousands)	$	4,381	$	4,105	$	3,583
Average per unit	$	743.19	$	813.78	$	743.35
Average per bed	$	236.71	$	254.65	$	231.50

Recurring capital expenditures exclude capital spending on significant renovations, community repositioning or other major periodic projects. Capital expenditures associated with newly developed communities are typically capitalized as part of their development costs. As a result, such communities typically require little to no recurring capital expenditures until their second year of operation or later.

Additionally, we are required by certain of our lenders to contribute contractual amounts annually to reserves for capital repairs and improvements at the mortgaged communities.

These contributions are typically less than, but could exceed, the amount of capital expenditures actually incurred during any given year at such communities.

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Commitments

The following table summarizes our contractual obligations as of December 31, 2013 (amounts in thousands):

	Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years		Total
Contractual Obligations:
Long-Term Debt Obligations (1)	$	13,834	$	260,689	$	42,474	$	103,393	$	420,390
Contractual Interest Obligations (2)	16,667		24,932		10,810		2,743		55,152
Operating Lease and Future Purchase Obligations (3)	59,365		23,626		17,153		576,492		676,636
Capital Reserve Obligations (4)	1,612		2,850		2,321		632		7,415
Total	$	91,478	$	312,097	$	72,758	$	683,260	$	1,159,593

(1) Includes required monthly principal amortization and amounts due at maturity on first mortgage debt secured by collegiate housing properties and any amounts due under the Fourth Amended Revolver and construction loan agreements.

(2) Includes contractual fixed-rate interest payments as well as estimates of variable rate interest payments based on the variable interest rates effective as of December 31, 2013. EROP has $193.4 million of variable rate debt as of December 31, 2013.

(3) Includes future minimum lease commitments under operating lease obligations (includes long-term ground leases), future purchase obligations for advertising and a presale agreement that obligates EROP to purchase a newly developed collegiate housing community adjacent to Florida International University for $43.5 million as long as the developer completes the project in time for fall 2014 occupancy.

(4) Includes future annual contributions to the capital reserve as required by certain mortgage debt.

Long-term indebtedness

As of December 31, 2013, 27 of our communities were unencumbered by mortgage debt.

As of December 31, 2013, we had outstanding mortgage and construction indebtedness of $422.7 million (net of unamortized debt premium of $2.3 million). The scheduled future maturities of this indebtedness as of December 31, 2013 were as follows (in thousands):

Year
2014	$	13,834
2015	135,310
2016	125,378
2017	40,050
2018	2,424
Thereafter	103,394
Total	420,390
Debt premium	2,291
Outstanding as of December 31, 2013, net of debt premium	$	422,681

As of December 31, 2013, the outstanding mortgage and construction debt had a weighted average interest rate of 4.33% and carried an average term to maturity of 2.91 years.

EROP had $356.9 million outstanding under the Fourth Amended Revolver as of December 31, 2013. The Fourth Amended Revolver, as amended, matures on January 14, 2018, and provides that EROP may extend the maturity date one year subject to certain conditions. The Fourth Amended Revolver requires interest only payments through maturity. The interest rate per annum applicable to the Fourth Amended Revolver is, at our option, equal to a base rate or LIBOR plus an applicable margin based upon our leverage. The interest rate applicable to the Fourth Amended Revolver as of December 31, 2013 was 1.57%.

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Distributions

The Trust is required to distribute 90% of its REIT taxable income (excluding the deduction for dividends paid and net 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 unitholders. These distributions are determined quarterly by the general partner and are generally equal to the dividend per share of the Trust’s common stock, determined quarterly by the Board. During July of 2012, the Trust's Board increased the annual dividend target by 43% from $0.28 to $0.40 per unit becoming effective with the August 15, 2012 dividend. During July of 2013, the Board increased the annual dividend target by 10% from $0.40 to $0.44 per unit becoming effective with the August 15, 2013 dividend.

A fourth quarter distribution of $0.11 per unit for the quarter ended December 31, 2013 was paid on February 14, 2014 to unitholders of record at the close of business on January 31, 2014.

Off-Balance Sheet Arrangements

EROP serves as non-recourse, carve-out guarantor for secured third-party debt in the amount of $24.0 million, held by one unconsolidated joint venture. In addition, EROP, with another joint venture partner, have jointly and severally guaranteed partial repayment for secured third-party construction debt held by another unconsolidated joint venture under development. This partial repayment guaranty is limited to $8.8 million. The terms of the guarantees are described in Note 16 to the accompanying consolidated financial statements.

In connection with the development agreement entered into on July 14, 2010 for a project at the Science + Technology Park at Johns Hopkins Medical Institute (see Note 2 to the accompanying consolidated financial statements) EROP has committed to provide a guarantee of repayment of a $42.0 million third-party construction loan for a $3.0 million fee. The guarantee fee will not be recognized until the second mortgage loan is repaid, which could be as early as the first quarter of 2014, as the construction loan and second mortgage are currently being refinanced. The project will have a $2.5 million reserve to fund any operating or debt service shortfalls that is to be replenished annually by East Baltimore Development, Inc., until a 1.10 debt service coverage ratio is achieved for twelve consecutive months. The second mortgage loan and related debt service are the first at risk if such reserve is not adequate to cover operating expenses and debt service on the construction loan.

In connection with the condominium agreement related to The Oaks on the Square project in Storrs, Connecticut (see Note 10 to the accompanying consolidated financial statements) EROP and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment of a $46.4 million construction loan to develop Phase I & II of the project and a $13.8 million construction to develop Phase III of the project. As of December 31, 2013 and 2012, $43.2 million and $1.3 million, respectively, had been drawn on the construction loans of which $11.8 million and $1.0 million, respectively, are attributable to LeylandAlliance LLC. These amounts are not included in our accompanying consolidated financial statements.

See Note 18 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent events related to off-balance sheet arrangements.

Non GAAP Measures

Funds From Operations (FFO)

As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and impairment write-downs of depreciable real estate plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We present FFO available to all unitholders because we consider it to be 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. As such, we also exclude the impact of noncontrolling interests in our 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, 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.

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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, April 2002 and by the October 2011 guidance described above), 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. We believe that net income is the most directly comparable GAAP measure to FFO available to unitholders. 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 make distributions.

EROP also uses core funds from operations, or Core FFO, as an operating performance measure. Core FFO is defined as FFO adjusted to include the economic impact of revenue on participating projects for which recognition is deferred for GAAP purposes. The adjustment for this revenue is calculated on the same percentage of completion method used to recognize revenue on third-party development projects. Core FFO also includes adjustments to exclude the impact of straight-line adjustments for ground leases, gains/losses on extinguishment of debt, transaction costs related to acquisitions and reorganization or severance costs. We believe that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of EROP’s assets. In addition, management uses Core FFO in the assessment of EROP’s operating performance and comparison to its industry peers and believes that Core FFO is a useful supplemental measure for the investing community to use in comparing EROP to other REITs as many REITs provide some form of adjusted or modified FFO.

The following table presents a reconciliation of FFO and Core FFO available to our unitholders to net income (loss) for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013			2012			2011
Net income (loss) attributable to unitholders	$	4,404		$	8,545		$	(10,963	)
Gain on sale of collegiate housing assets	(3,913		)	(5,496		)	(2,388		)
Loss on impairment of collegiate housing assets	5,001			—			7,859
Collegiate housing property depreciation and amortization on equity investees	49,316			37,237			29,101
Equity portion of real estate depreciation and amortization on equity investees	196			225			412
Equity portion of loss on sale of collegiate housing property on equity investee	—			88			256
Noncontrolling interests	168			181			193
FFO available to unitholders	55,172			40,780			24,470
Other adjustments to FFO
Loss on extinguishment of debt	—			—			757
Acquisition costs	393			1,110			741
Straight-line adjustment for ground leases	5,255			4,364			4,208
Impact of other adjustments to FFO:	5,648			5,474			5,706
FFO on Participating Developments:
Interest on loan to Participating Development	1,825			1,830			1,598
Development fees on Participating Development, net of costs and taxes	454			91			887
FFO on Participating Developments:	2,279			1,921			2,485
Core FFO available to unitholders	$	63,099		$	48,175		$	32,661

Net Operating Income (NOI)

We believe NOI is a useful measure of our collegiate housing operating performance. We define NOI as rental and other community-level revenues earned from our collegiate housing communities less community-level operating expenses, excluding management fees, depreciation, amortization, ground lease expense and impairment charges and including regional and other corporate costs of supporting the communities. Other REITs may use different methodologies for calculating NOI,

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and accordingly, EROP's NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. EROP uses NOI to evaluate performance on a community-by-community basis because it allows management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on EROP’s operating results. However, NOI should only be used as an alternative measure of EROP's financial performance.

The following is a reconciliation of our GAAP operating income to NOI for years ended December 31, 2013, 2012 and 2011 (in thousands):

	For the Year ended December 31,
	2013		2012		2011
Operating income	$	24,330	$	15,018	$	12,392
Less: Third-party development services revenue	2,989		820		4,103
Less: Third-party management services revenue	3,697		3,446		3,336
Plus: Development and management services expenses	6,477		6,266		5,506
Plus: General and administrative expenses	7,678		7,910		6,810
Plus: Ground leases	7,622		6,395		5,498
Plus: Depreciation and amortization	48,098		33,240		23,858
NOI	$	87,519	$	64,563	$	46,625

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)

Adjusted EBITDA is defined as net income or loss excluding: (1) straight line adjustment for ground leases; (2) acquisition costs; (3) depreciation and amortization; (4) loss on impairment of collegiate housing assets; (5) gain on sale of collegiate housing assets; (6) interest expense; (7) other non-operating expense (income); (8) income tax expense (benefit); (9) non-controlling interest; and (10) applicable expenses related to discontinued operations. We consider Adjusted EBITDA useful to an investor in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results.

The following is a reconciliation of our GAAP net income (loss) to Adjusted EBITDA for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	For the Year ended December 31,
	2013			2012			2011
Net income (loss) attributable to unitholders	$	4,404		$	8,545		$	(10,963	)
Straight line adjustment for ground leases	5,255			4,364			4,208
Acquisition costs	393			1,110			741
Depreciation and amortization	48,098			33,240			23,843
Depreciation and amortization – discontinued operations	1,767			4,634			5,712
Loss on impairment of collegiate housing assets – discontinued operations	5,001			88			7,859
Gain on sale of collegiate housing assets  – discontinued operations	(3,913		)	(5,496		)	(2,388		)
Interest expense, net	17,526			14,390			17,274
Interest expense – discontinued operations	—			—			1,044
Other nonoperating expense (income)	1,311			932			1,373
Income tax expense (benefit)	203			(884		)	(95		)
Noncontrolling interest	227			92			188
Applicable expenses (income) related to discontinued operations	—			—			472
Adjusted EBITDA	$	80,272		$	61,015		$	49,268

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Debt to gross assets

Debt to gross assets is defined as total debt, excluding the unamortized debt premium, divided by gross assets, or total assets excluding accumulated depreciation on real estate assets. We consider debt to gross assets useful to an investor in evaluating our leverage and in assessing our capital structure, because it excludes noncash items such as accumulated depreciation and provides a more accurate depiction of our capital structure.

The following is a reconciliation of our GAAP total assets to gross assets as of December 31, 2013 and 2012 (in thousands):

	As of December 31,
	2013			2012
Mortgage and construction loans, net of unamortized premium	$	422,681		$	398,846
Unamortized premium	2,291			3,068
Mortgage and construction loans	420,390			395,778
Unsecured revolving credit facility	356,900			79,000
Total debt	$	777,290		$	474,778
Total assets	$	1,610,565		$	1,324,687
Accumulated depreciation(1)	204,181			175,310
Gross assets	$	1,814,746		$	1,499,997
Debt to gross assets	42.8		%	31.7		%
(1) Represents accumulated depreciation on real estate assets.

Inflation

Our collegiate housing leases typically do not have terms that extend beyond twelve 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, our ability to raise rental rates may be limited by a weak economic environment, increased competition from new collegiate housing in our primary markets and/or a reduction in student enrollment at our principal colleges and universities.

Recent Accounting Pronouncements

There were no recent accounting pronouncements adopted during the year ended December 31, 2013 that had a material impact or are expected to have a material impact on EROP's consolidated financial statements. A discussion of recent accounting pronouncements not yet effective affecting EROP is included in Note 2 of the accompanying consolidated financial statements, included in Exhibit 99.1 of this Form 8-K.

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EX-99.3

EXHIBIT 99.3

Education Realty Operating Partnership, L.P.

Table of Contents

Condensed Consolidated Financial Statements                                    

	Page
Condensed Consolidated Balance Sheets of Education Realty Operating Partnership, L.P. and Subsidiaries as of September 30, 2014 and December 31, 2013	2
Condensed Consolidated Statements of Comprehensive Income of Education Realty Operating Partnership, L.P. and Subsidiaries for the nine months ended September 30, 2014 and 2013	3
Condensed Consolidated Statements of Changes in Partners' Capital and Noncontrolling Interests of Education Realty Operating Partnership, L.P. and Subsidiaries for the nine months ended September 30, 2014 and 2013	5
Condensed Consolidated Statements of Cash Flows of Education Realty Operating Partnership, L.P. and Subsidiaries for the nine months ended September 30, 2014 and 2013	6
Notes to Condensed Consolidated Financial Statements	9

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except unit data)

(Unaudited)

	September 30, 2014			December 31, 2013
Assets:
Collegiate housing properties, net	$	1,619,531		$	1,388,885
Collegiate housing properties - held for sale, net	27,834			—
Assets under development	69,635			116,787
Corporate office furniture, net	3,382			3,249
Cash and cash equivalents	18,422			22,073
Restricted cash	13,482			12,253
Student contracts receivable, net	2,058			807
Receivable from managed third parties	16			361
Notes receivable	375			18,125
Goodwill and other intangibles, net	3,712			3,822
Other assets	54,457			44,203
Total assets	$	1,812,904		$	1,610,565
Liabilities:
Mortgage and construction debt, net of unamortized premium	$	336,114		$	422,681
Unsecured revolving credit facility	210,000			356,900
Unsecured term loans	187,500			—
Accounts payable	5,252			2,289
Accrued expenses	64,881			65,357
Deferred revenue	25,517			23,498
Total liabilities	829,264			870,725
Commitments and contingencies (see Note 6)	—			—
Redeemable limited partner units	8,501			7,512
Redeemable noncontrolling interests	3,551			2,359
Partners' capital:
General partner - 20,760 units outstanding as of September 30, 2014 and December 31, 2013	193			190
Limited partners - 142,381,998 and 114,719,395 units issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	970,785			725,534
Accumulated other comprehensive income	(2,414		)	—
Total partners' capital	968,564			725,724
Noncontrolling interests	3,024			4,245
Total partners' capital	971,588			729,969
Total liabilities and partners' capital	$	1,812,904		$	1,610,565

See accompanying notes to the condensed consolidated financial statements.

2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands, except per unit data)

(Unaudited)

	Nine months ended September 30,
	2014			2013
Revenues:
Collegiate housing leasing revenue	$	144,677		$	116,338
Third-party development consulting services	5,264			1,989
Third-party management services	2,856			2,710
Operating expense reimbursements	6,492			8,141
Total revenues	159,289			129,178
Operating expenses:
Collegiate housing leasing operations	70,062			59,430
Development and management services	6,964			5,224
General and administrative	7,520			5,693
Depreciation and amortization	42,928			33,548
Ground lease expense	6,162			5,631
Loss on impairment of collegiate housing properties	12,734			—
Reimbursable operating expenses	6,492			8,141
Total operating expenses	152,862			117,667
Operating income	6,427			11,511
Nonoperating (income) expenses:
Interest expense	15,076			12,478
Amortization of deferred financing costs	1,533			1,268
Interest and other nonoperating income	(9,638		)	(372		)
Gain on insurance settlement	(8,133		)	—
Loss on extinguishment of debt	892			—
Total nonoperating (income) expense	(270		)	13,374
Income (loss) before equity in losses of unconsolidated entities, income taxes, discontinued operations and gain on sale of collegiate housing properties	6,697			(1,863		)
Equity in losses of unconsolidated entities	(370		)	(102		)
Income (loss) before income taxes, discontinued operations and gain on sale of collegiate housing properties	6,327			(1,965		)
Income tax expense (benefit)	598			(269		)
Income (loss) from continuing operations	5,729			(1,696		)
Income from discontinued operations	—			4,381
Income before gain on sale of collegiate housing properties	5,729			2,685
Gain on sale of collegiate housing properties	19,322			—
Net income	25,051			2,685
Less: Net income attributable to the noncontrolling interests	136			(52		)
Net income attributable to unitholders	$	24,915		$	2,737
Earnings (loss) per unit information:
Continuing operations	$	0.20		$	(0.02	)
Discontinued operations	—			0.04
Net income attributable to unitholders per unit	$	0.20		$	0.02
Weighted average units outstanding – basic	124,849			115,132
Weighted average units outstanding – diluted	125,057			115,132

3

	Nine months ended September 30,
	2014			2013
Amounts attributable to unitholders:
Income (loss) from continuing operations, net of noncontrolling interests	$	24,915		$	(1,613	)
Income from discontinued operations, net of noncontrolling interests	—			4,350
Net income	$	24,915		$	2,737
Comprehensive income:
Net income	$	25,051		$	2,685
Other comprehensive loss:
Loss on cash flow hedging derivatives	(2,414		)	—
Comprehensive income	22,637			2,685
Less: comprehensive income attributable to the noncontrolling interests	136			(52		)
Comprehensive income attributable to unitholders	$	22,501		$	2,737

See accompanying notes to the condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND NONCONTROLLING INTERESTS

Nine Months Ended September 30,

(Amounts in thousands, except unit data)

(Unaudited)

	General Partner				Limited Partners				Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
	Units	Amount			Units	Amount
Balance as of December 31, 2012	20,760	$	196		113,041,692	$	757,526		$	—		$	5,088		$	762,810
Vesting of restricted stock and restricted stock units	—	—			33,180	360			—			—			360
Issuance of units in exchange for contributions of gross equity offering proceeds	—	—			1,563,196	17,064			—			—			17,064
Offering costs and underwriters discount paid on behalf of the Trust	—	—			—	(453		)	—			—			(453		)
Amortization of restricted stock awards	—	—			43,493	1,008			—			—			1,008
Distributions	—	(7		)	—	(35,373		)	—			—			(35,380		)
Return of equity to noncontrolling interests	—	—			—	—			—			(796		)	(796		)
Contributions from noncontrolling interests	—	—			—	—			—			1,197			1,197
Purchase of noncontrolling interests	—	—			—	(6,693		)	—			(175		)	(6,868		)
Comprehensive income	—	2			—	2,677			—			6			2,685
Balance as of September 30, 2013	20,760	$	191		114,681,561	$	736,116		$	—		$	5,320		$	741,627
Balance as of December 31, 2013	20,760	$	190		114,719,395	$	725,534		$	—		$	4,245		$	729,969
Vesting of restricted stock and restricted stock units	—	—			40,152	420			—			—			420
Issuance of units in exchange for contributions of gross equity offering proceeds	—	—			27,447,359	281,906			—			—			281,906
Offering costs and underwriters discount paid on behalf of the Trust	—	—			—	(10,960		)	—			—			(10,960		)
Amortization of restricted stock awards	—	—			175,092	562			—			—			562
Distributions	—	(7		)	—	(42,043		)	—			—			(42,050		)
Return of equity to noncontrolling interests	—	—			—	—			—			(818		)	(818		)
Contributions from noncontrolling interests	—	—			—	—			—			2,205			2,205
Purchase of noncontrolling interests	—	—			—	(6,507		)	—			(2,795		)	(9,302		)
Adjustments to reflect redeemable limited partners' interests at fair value	—	—			—	(1,010		)	—			—			(1,010		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—			—	(1,765		)	—			—			(1,765		)
Comprehensive income	—	10			—	24,648			(2,414		)	187			22,431
Balance as of September 30, 2014	20,760	$	193		142,381,998	$	970,785		$	(2,414	)	$	3,024		$	971,588

See accompanying notes to the condensed consolidated financial statements.

5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine months ended September 30,
	2014			2013
Operating activities:
Net income	$	25,051		$	2,685
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	42,928			33,547
Depreciation included in discontinued operations	—			1,414
Loss on disposal of assets	54			12
Gain on sale of collegiate housing properties	(19,322		)	(3,895		)
Noncash rent expense related to the straight-line adjustment for long-term ground leases	3,634			4,024
Loss on impairment of collegiate housing properties	12,734			—
Gain on insurance settlement	(8,133		)	—
Loss on extinguishment of debt	892			—
Amortization of deferred financing costs	1,533			1,268
Amortization of unamortized debt premiums	(598		)	(581		)
Distributions of earnings from unconsolidated entities	52			59
Noncash compensation expense related to stock-based incentive awards	1,775			1,678
Equity in losses of unconsolidated entities	370			102
Change in operating assets and liabilities (net of acquisitions)	10,310			23,263
Net cash provided by operating activities	71,280			63,576
Investing activities:
Property acquisitions, net of cash acquired	(132,202		)	(91,216		)
Purchase of corporate furniture and fixtures	(759		)	(623		)
Restricted cash	(1,229		)	(4,142		)
Insurance proceeds received on property losses	2,129			11,124
Investment in collegiate housing properties	(14,676		)	(12,449		)
Proceeds from sale of collegiate housing properties	69,000			20,213
Notes receivable	(250		)	(125		)
Repayment of notes receivable	18,000			3,000
Earnest money deposits	—			(225		)
Investment in assets under development	(177,847		)	(177,674		)
Investments in unconsolidated entities	(8,342		)	(8,921		)
Net cash used in investing activities	(246,176		)	(261,038		)
Financing activities:
Payment of mortgage and construction notes	(95,720		)	(51,394		)
Borrowings under mortgage and construction loans	9,751			87,834
Debt issuance costs	(2,183		)	(2,711		)
Borrowings under unsecured term loan facility	187,500			—
Debt extinguishment costs	(446		)	—
Borrowings on line of credit	344,000			214,033
Repayments of line of credit	(490,900		)	(24,133		)
Proceeds from issuance of common units in exchange for contributions	281,907			17,049
Payment of offering costs and underwriters discount on behalf of the Trust	(10,960		)	(453		)
Purchase and return of equity to noncontrolling interests	(10,138		)	(7,664		)
Contributions from noncontrolling interests	2,205			1,197
Distributions paid to unitholders	(42,050		)	(35,380		)
Dividends and distributions paid to noncontrolling interests	(800		)	(334		)
Purchase of stock awards to satisfy tax withholdings	(921		)	(1,286		)
Net cash provided by financing activities	171,245			196,758
Net decrease in cash and cash equivalents	(3,651		)	(704		)
Cash and cash equivalents, beginning of period	22,073			17,039
Cash and cash equivalents, end of period	$	18,422		$	16,335

6

	Nine months ended September 30,
	2014		2013
Supplemental disclosure of cash flow information:
Interest paid	$	19,939	$	17,027
Income taxes paid	$	121	$	428
Supplemental disclosure of noncash activities:
Stock-based compensation	$	1,775	$	1,678
Capital expenditures in accounts payable and accrued expenses related to developments	$	7,670	$	10,552
Change in fair value of derivative instruments	$	2,414	$	—

7

See accompanying notes to the condensed consolidated financial statements.

8

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and description of business

Education Realty Operating Partnership, LP ("EROP" or the "Operating Partnership") is a Delaware limited partnership that was organized by Education Realty Trust, Inc. (the "Trust") to own and operate our business. The general partner of EROP is Education Realty OP GP, Inc. ("OP GP"), an entity that is wholly owned by the Trust. The limited partners of EROP are Education Realty OP Limited Partner Trust, a wholly owned subsidiary of the Trust, and other limited partners consisting of current and former members of management and non-affiliated third parties. The OP GP, as the sole general partner of the Operating Partnership, has the responsibility and discretion in the management and control of the Operating Partnership, and the limited partners of the Operating Partnership, in such capacity, have no authority to transact business for, or participate in the management activities of the Operating Partnership.

Interests in EROP are represented by Operating Partnership Units ("OP units"). The Operating Partnership's net income is allocated to the partners based on their respective percentage interests. Distributions are made in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of Education Realty Operating Partnership, LP (the "Operating Partnership Agreement"), on a per unit basis that is equal to the dividend per share on the Trust's common stock, which is publicly traded on the New York Stock Exchange ("NYSE") under the ticker symbol "EDR".

EROP owns, directly or indirectly, interests in collegiate housing communities located on or near major universities in the United States. EROP also provides real estate facility management, development and other advisory services through the following subsidiaries:

• EDR Management Inc. ("Management Company"), a Delaware corporation collegiate housing management activities; and

• EDR Development LLC ("Development Company"), a Delaware limited liability company providing development consulting services for third party collegiate housing communities.

EROP is subject to the risks involved with the ownership and operation of residential real estate near major universities throughout the United States. The risks include, among others, those normally associated with the changes in the demand for housing by the students at the related universities, competition for tenants, creditworthiness of tenants, changes in tax laws, interest rate levels, the availability of financing and potential liability under environmental and other laws.

2. Summary of significant accounting policies

Basis of presentation and principles of consolidation

The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States (“GAAP”). The accompanying condensed consolidated financial statements of EROP represent the assets and liabilities and operating results of EROP and subsidiaries in which EROP owns a controlling financial interest. All intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

Interim financial information

The accompanying unaudited interim financial statements include all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of EROP's financial position, results of operations and cash flows for such periods. Because of the seasonal nature of the business, the operating results and cash flows are not necessarily indicative of results that may be expected for any other interim periods or for the full fiscal year. These financial statements should be read in conjunction with EROP's consolidated financial statements and related notes included in Exhibit 99.1 of this Form 8-K.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the

9

financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and cash equivalents

All highly-liquid investments with a maturity of three months or less when purchased are considered cash equivalents. Restricted cash is excluded from cash and cash equivalents for the purpose of preparing the condensed consolidated balance sheets and statements of cash flows. EROP maintains cash balances in various banks. At times, the amounts of cash on deposit with certain banks may exceed the amount the Federal Deposit Insurance Corporation (“FDIC”) insures. As of September 30, 2014, EROP had $8.4 million of cash on deposit that was uninsured by the FDIC or in excess of the FDIC limits.

Restricted cash

Restricted cash includes escrow accounts held by lenders for the purpose of paying taxes, insurance, principal and interest and funding capital improvements.

Notes receivable

On August 26, 2013, EROP provided a $0.5 million promissory loan to College Park Apartments, Inc. ("CPA"), EROP's partner in the unconsolidated joint venture University Village-Greensboro LLC (see Note 3), at an interest rate of 10% per annum and a maturity date of August 1, 2020. Under the loan, CPA can make one draw per calendar quarter and has borrowed $0.4 million as of September 30, 2014. The loan is secured by CPA's interest in the joint venture.

On July 14, 2010, EROP entered into definitive agreements for the development, financing and management of a $60.7 million, 20-story, 572-bed graduate collegiate housing complex at the Science + Technology Park at Johns Hopkins Medical Institute. EROP developed and manages the building, which was constructed on land owned by Johns Hopkins University and leased to a subsidiary of East Baltimore Development, Inc., a nonprofit partnership of private and public entities dedicated to Baltimore’s urban revitalization. Under terms of the agreements, EROP (a) received development and construction oversight fees and reimbursement of predevelopment expenses, (b) invested in the form of an $18.0 million second mortgage, (c) received a $3.0 million fee for providing a repayment guarantee of the construction first mortgage (see Note 6) and (d) received a 10-year management contract. The second mortgage had a maturity date of July 31, 2040. As of December 31, 2013, the note receivable for the second mortgage had a balance of $18.0 million and is recorded in notes receivable in the accompanying condensed consolidated balance sheet. EROP did not have an ownership interest in any form that would require consolidation. Due to its financing commitments to the project along with other factors, EROP deferred recognition of the development services revenue, guarantee fee revenue and interest income earned on the second mortgage until the second mortgage was repaid, and EROP no longer had a substantial continuing financial involvement. During the quarter ended September 30, 2014, the third party owners closed on permanent financing for the community and used the proceeds to repay the construction first mortgage and second mortgage. As a result, EROP recognized development services revenue, net of costs, of $2.6 million (including participation in cost savings of $0.8 million), guarantee fee revenue of $3.0 million (reflected in interest income) and interest income on the second mortgage of $6.5 million.

Collegiate housing properties

Land, land improvements, buildings and improvements, and furniture, fixtures and equipment are recorded at cost. Buildings and improvements are depreciated over 15 to 40 years, land improvements are depreciated over 15 years and furniture, fixtures, and equipment are depreciated over 3 to 7 years. Depreciation is computed using the straight-line method for financial reporting purposes over the estimated useful life.

Acquired collegiate housing communities’ results of operations are included in EROP’s results of operations from the respective dates of acquisition. Appraisals, estimates of cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, land improvements, buildings and improvements, furniture, fixtures and equipment and identifiable intangibles, such as amounts related to in-place leases. Acquisition costs are expensed as incurred and are included in general and administrative expense in the accompanying condensed consolidated statements of comprehensive income.

Management assesses impairment of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management uses an estimate of future undiscounted cash flows of the related asset based on its intended use to determine whether the carrying value is recoverable. If EROP determines that the carrying value of an asset is not recoverable, the fair value of the asset is estimated and an impairment loss is recorded

10

to the extent the carrying value exceeds estimated fair value. Management estimates fair value using discounted cash flow models, market appraisals if available, and other market participant data. During the nine months ended September 30, 2014, EROP recorded a $12.7 million loss on impairment of collegiate housing properties. The impairment loss recorded was related to an impairment recognized in the first quarter of 2014 prior to the sale of a property during the first quarter of 2014 and for two additional properties identified in the second and third quarters that were determined to be impaired due to a change in circumstances that indicated their respective carrying values may not be recoverable. The changes in circumstances for the properties could be attributable to changes in property specific market conditions, changes in anticipated future use and/or leasing results or a combination of these factors.

When a collegiate housing property meets the criteria to be classified as held for sale, the fair value less cost to sell such asset is estimated. If the fair value less cost to sell the asset is less than the carrying amount of the asset, an impairment charge is recorded for the estimated loss. Depreciation expense is no longer recorded once a collegiate housing property has met the held for sale criteria. Operations of collegiate housing properties that were sold or classified as held for sale were recorded as part of discontinued operations prior to January 1, 2014. During the nine months ended September 30, 2013, two properties were classified as discontinued operations in the accompanying condensed consolidated statements of comprehensive income. Both of these properties were sold by December 31, 2013 (see Note 8). Effective January 1, 2014, EROP adopted Accounting Standards Update No. 2014-08 related to the presentation of discontinued operations. Prospectively, only dispositions that represent a strategic shift in EROP's business will qualify for treatment as discontinued operations. The property dispositions during the nine months ended September 30, 2014 did not qualify for treatment as discontinued operations and, as a result, the operations of the properties are included in continuing operations in the accompanying condensed consolidated statements of comprehensive income. As of September 30, 2014, one property met the held for sale criteria, and it is classified as collegiate housing properties - held for sale, net in the accompanying condensed consolidated balance sheet. This property did not meet the criteria for treatment as discontinued operations under the new guidance and was sold in October 2014 (see Note 12).

Common stock issued by the Trust and related offering costs

The Trust is structured as an umbrella partnership REIT ("UPREIT") and contributes all proceeds from its various equity offerings to EROP. In return for those contributions, the Trust (through Education Realty OP Limited Partner Trust) receives OP units equal to the number of shares of common stock the Trust issued in the equity offering. As stipulated in the Operating Partnership Agreement, proceeds from equity offerings are deemed to be contributed to the Operating Partnership at the gross amount with EROP incurring expenses related to the underwriters commission and other offering costs. Accordingly, proceeds from common stock issuances contributed to EROP in exchange for OP Units are presented gross on the condensed consolidated statement of cash flows and in the condensed consolidated statement of changes in partners' capital and noncontrolling interest. They payment of offering costs by EROP on behalf of the Trust is considered a distribution.

On October 24, 2014, the Trust entered into three equity distribution agreements pursuant to which the Trust may issue and sell shares of its common stock having an aggregate gross offering amount of up to $150 million (see Note 12). When stock is sold, the Trust intends to contribute the proceeds to EROP in exchange for units and EROP intends to use the net proceeds to repay the unsecured revolving credit facility (see Note 4), fund its development pipeline, fund acquisitions and for general corporate purposes.

On June 24, 2014, the Trust completed a follow-on equity offering of 24.5 million shares of its common stock, which included 3.2 million shares purchased by the underwriters pursuant to an option to purchase additional shares. The Trust received approximately $239.4 million in net proceeds from the offering after deducting the underwriting discount and other offering expenses payable by the Trust. The Trust contributed the proceeds to EROP and EROP used the net proceeds to pay down the unsecured revolving credit facility (see Note 4).

On May 22, 2012, the Trust entered into two equity distribution agreements pursuant to which the Trust could issue and sell shares of its common stock having an aggregate gross offering amount of up to $50 million. As of December 31, 2013, the Trust had sold 1.6 million shares of common stock under the distribution agreements for net proceeds of approximately $17.8 million. The Trust contributed the proceeds to EROP and EROP used the net proceeds to repay debt, fund its development pipeline, fund acquisitions and for general corporate purposes. The Trust sold 2.9 million shares under the distribution agreements during the nine months ended September 30, 2014 for net proceeds of approximately $31.5 million.

On May 19, 2010, the Trust’s stockholders approved the Education Realty Trust, Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective on July 1, 2010. Pursuant to the ESPP, all employees of EROP are eligible to make periodic purchases of the Trust's common stock through payroll deductions. Subject to the discretion of the compensation committee of the Board, the purchase price per share of common stock purchased by employees under the ESPP is 85% of the fair market value on the applicable purchase date. The Trust reserved 300,000 shares of common stock for sale under the ESPP. The

11

aggregate cost of the ESPP (generally the 15% discount on the shares purchased) is recorded by EROP as a period expense as the employees receiving the benefit are employees of EROP. For the nine months ended September 30, 2014 and 2013, total compensation expense relating to the ESPP was $26.1 thousand and $14.4 thousand, respectively. The compensation expense is recorded in general and administrative expense in the accompanying condensed consolidated statements of comprehensive income.

Debt premiums

Differences between the estimated fair value of debt and the principal value of debt assumed in connection with collegiate housing property acquisitions are amortized over the term of the related debt as either an offset or increase to interest expense using the effective interest method. As of September 30, 2014 and December 31, 2013, EROP had net unamortized debt premiums of $1.7 million and $2.3 million, respectively. These amounts are included in mortgage and construction loans in the accompanying condensed consolidated balance sheets.

Income taxes

The Trust qualifies as a REIT under the Code and is generally not subject to federal, state and local income taxes on any of its taxable income that it distributes if it distributes at least 90% of its REIT taxable income for each tax year to its stockholders and meets certain other requirements. If the Trust fails to qualify as a REIT for any taxable year, the Trust will be subject to federal, state and local income taxes (including any applicable alternative minimum tax) on its taxable income. EROP is bound by the terms of the Amended and Restated Agreement of Limited Partnership to ensure that the Trust continues to qualify as a REIT.

The Operating Partnership is generally not liable for federal corporate income taxes as income or loss is reported in the tax returns of its partners. EROP has elected, however, to treat certain subsidiaries, including the Management Company, as taxable REIT subsidiaries, which are taxed as C Corporations for federal, state and local income taxes. The Management Company provides management services, and through the Development Company, provides development services to properties owned by EROP as well as third-parties. Deferred tax assets and liabilities are recognized based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect in the years in which those temporary differences are expected to reverse.

EROP had no unrecognized tax benefits as of September 30, 2014 and December 31, 2013. EROP and its subsidiaries file federal and state income tax returns. As of September 30, 2014, open tax years generally included tax years for 2011, 2012 and 2013. EROP’s policy is to include interest and penalties related to unrecognized tax benefits in general and administrative expenses. As of September 30, 2014 and December 31, 2013, EROP had no interest or penalties recorded related to unrecognized tax benefits.

Noncontrolling interests

As of September 30, 2014, EROP had entered into three joint venture agreements to develop, own and manage properties near Arizona State University - Downtown Phoenix (Roosevelt Point), Duke University (605 West) and The University of Louisville (The Retreat at Louisville). EROP is deemed to be the primary beneficiary of these communities; therefore, EROP accounts for the joint ventures using the consolidation method of accounting. EROP's joint venture partners' investments in 605 West met the requirements to be classified outside of permanent equity, and is therefore classified as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets and net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of comprehensive income due to the partner's ability to put their ownership interests to EROP as stipulated in the operating agreements. EROP's joint venture partners’ investments in the Arizona State University - Downtown Phoenix joint venture and The University of Louisville joint venture are accounted for as noncontrolling interests in the accompanying condensed consolidated balance sheets and statements of changes in partners' capital and noncontrolling interests and net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of comprehensive income.

As of December 31, 2013, EROP had entered into a joint venture agreement to develop, own and manage a collegiate housing property near The University of Mississippi (The Retreat at Oxford). EROP's joint venture partners’ investment is accounted for as noncontrolling interests in the accompanying condensed consolidated balance sheets and statements of changes in partners' capital and noncontrolling interests and net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of comprehensive income through August 29, 2014. On August 29, 2014, EROP purchased its joint venture partner's 30% interest in The Retreat at Oxford for $8.5 million. This collegiate housing property is now wholly owned by EROP.

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On April 15, 2014, EROP purchased a portion of its joint venture partner's interest in Roosevelt Point for $0.8 million. As a result of this purchase, EROP now holds a 95% ownership in the Roosevelt Point collegiate housing property. Additionally, on September 10, 2013, EROP purchased its joint venture partner's 10% interest in the collegiate housing property referred to as East Edge located near the University of Alabama for $6.9 million and as a result owns 100% of this property.

The units of the limited partnership interest of University Towers Operating Partnership, LP (“University Towers Operating Partnership Units”) are also referred to as noncontrolling interests. EROP follows the guidance issued by the Financial Accounting Standards Board (“FASB”) regarding the classification and measurement of redeemable securities. The University Towers Operating Partnership Units are redeemable at the option of the holder and they participate in net income and distributions. Accordingly, EROP has determined that the University Towers Operating Partnership Units meet the requirements to be classified outside of permanent equity, and are therefore also classified as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets. Income related to such units are recorded as net income attributable to noncontrolling interests in the accompanying condensed consolidated statements of comprehensive income.

The following table sets forth the activity with the redeemable noncontrolling interests for the nine months ended September 30, 2014 and 2013 (in thousands):

	2014			2013
Beginning balance – redeemable noncontrolling interests	$	2,359		$	1,164
Net loss attributable to redeemable noncontrolling interests	(55		)	(59		)
Adjustments to report redeemable noncontrolling interests at fair value	1,765			—
Distributions attributable to redeemable noncontrolling interests	(518		)	(77		)
Ending balance – redeemable noncontrolling interests	$	3,551		$	1,028

The value of redeemable noncontrolling interests is reported at the greater of fair value or historical cost at the end of each reporting period. As of September 30, 2014, EROP reported the redeemable noncontrolling interests at fair value, which was greater than historical cost.

Redeemable Limited Partner Units

EROP classifies the portion of OP units that EROP is required, either by contract or securities law, to deliver registered shares of common stock of the Trust or cash, at the general partner's discretion, to the exchanging OP unitholder as redeemable limited partner units in the mezzanine section of the accompanying consolidated balance sheets. The redeemable limited partner units are reported at the greater of fair value or historical cost at the end of each reporting period. As of December 31, 2013, EROP reported the redeemable limited partner units at historical cost, which was greater than fair value. During the year ended December 31, 2012, 43,832 Operating Partnership Units were redeemed for 43,832 shares of common stock of the Trust.

Below is a table summarizing the activity of redeemable limited partners' capital for the nine months ended September 30, 2014 and 2013 (in thousands):

	2014			2013
Beginning balance – redeemable limited partner units	$	7,512		$	7,780
Net income	261			57
Distributions	(282		)	(257		)
Adjustments to report redeemable limited partner at fair value	1,010			—
Ending balance – redeemable limited partner units	$	8,501		$	7,580

The value of redeemable limited partner units is reported at the greater of fair value or historical cost at the end of each reporting period. As of September 30, 2014, EROP reported the redeemable limited partner units at fair value, which was greater than historical cost.

Earnings per unit

Basic earnings per unit is calculated by dividing net earnings available to unitholders by the weighted average number of units outstanding during the applicable period. Diluted earnings per unit is calculated similarly, except that it includes the dilutive effect of the assumed exercises of potentially dilutive securities.

13

The following is a summary of the elements used in calculating basic and diluted earnings per unit (dollars in thousands):

	Nine Months Ended September 30,
	2014		2013
Numerator - basic and diluted earnings per unit (in thousands):
Income (loss) from continuing operations	$	5,729	$	(1,696	)
Income (loss) from continuing operations attributable to noncontrolling interests	136		(52		)
Income (loss) from continuing operations attributable to unitholders	5,865		(1,748		)
Income from discontinued operations	—		4,381
Net income attributable to unitholders	$	5,865	$	2,633
Denominator:
Weighted average units outstanding	124,019,046		114,301,779
Redeemable OP units	830,343		830,343
Weighted average units outstanding - basic	124,849,389		115,132,122
Redeemable noncontrolling units	207,257		—			(1)
Weighted average units outstanding - diluted	125,056,646		115,132,122

⁽¹⁾ For the nine months ended September 30, 2013, the University Towers Operating Partnership Units were outstanding, but were not included in the computation of diluted earnings per share because the effects of their inclusion would be anti-dilutive. A reconciliation of the numerators and denominators for the basic and diluted earnings per share computation is not presented, as EROP reported a loss from continuing operations for the nine months ended September 30, 2013, and therefore the effect of the inclusion of all potentially dilutive securities would be anti-dilutive when computing diluted earnings per share; thus, the computation for both basic and diluted earnings per share is the same.

Goodwill and other intangible assets

Goodwill is tested annually for impairment as of December 31, and is tested for impairment more frequently if events and circumstances indicate that the assets might be impaired. An impairment loss is recognized to the extent that the carrying value exceeds the asset’s fair value. The accumulated impairment loss recorded by EROP as of December 31, 2008 was $0.4 million. No additional impairment has been recorded through September 30, 2014. The carrying value of goodwill was $3.1 million as of September 30, 2014 and December 31, 2013, of which $2.1 million was recorded related to the management services segment and $0.9 million was recorded related to the development consulting services segment. Goodwill is not subject to amortization. Other intangible assets generally include in-place leases acquired in connection with acquisitions and are amortized over the estimated life of the lease/contract term. In connection with the acquisition of The District on Apache (see Note 7), EROP recorded an intangible asset related to in-place leases of $0.6 million. The carrying value of other intangible assets was $0.6 million and $0.8 million as of September 30, 2014 and December 31, 2013, respectively.

Investment in unconsolidated entities

EROP accounts for its investments in unconsolidated joint ventures using the equity method of accounting whereby the carrying value of an investment is adjusted for EROP’s share of earnings or losses of the respective investment reduced by distributions received by EROP. The earnings or losses and distributions of the unconsolidated joint ventures are allocated based on each owner’s respective ownership interests. These investments are classified as other assets or accrued expenses, depending on whether the distributions exceed EROP’s contributions and share of earnings or losses in the joint ventures, in the accompanying condensed consolidated balance sheets (see Note 3).

Comprehensive income

EROP follows the authoritative guidance issued by the FASB relating to the reporting and display of comprehensive income and its components. For all periods presented, comprehensive income includes net income and other comprehensive income (loss) related to the change in fair value of the interest rate swaps (see Note 10).

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Stock-based compensation

On May 4, 2011, the Trust’s stockholders approved the Education Realty Trust, Inc. 2011 Omnibus Equity Incentive Plan (the “2011 Plan”). The 2011 Plan replaced the Education Realty Trust, Inc. 2004 Incentive Plan (“2004 Plan”) in its entirety. The 2011 Plan is described more fully in Note 9. EROP recognizes compensation costs related to share-based payments in the accompanying condensed consolidated financial statements in accordance with authoritative guidance. This requires compensation costs to be recognized in the financial statements of a subsidiary to ensure the user of the financial statements understands all of the subsidiary's cost of doing business. Although the 2011 Plan was established by the Trust, the intent was to provide incentive to the management employees of EROP and therefore the related compensation costs have been reflected in the accompanying condensed consolidated statements of comprehensive income and were treated as capital contributions in the accompanying condensed consolidated statement of changes in partners' capital and noncontrolling interests.

Derivative instruments and hedging activities

EROP records all derivative financial instruments on the balance sheet at fair value. Changes in fair value are recognized either in earnings or as other comprehensive income (loss), depending on whether the derivative has been designated as a fair value or cash flow hedge and whether it qualifies as part of a hedging relationship, the nature of the exposure being hedged, and how effective the derivative is at offsetting movements in underlying exposure. EROP discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative expires or is sold, terminated, or exercised; it is no longer probable that the forecasted transaction will occur; or management determines that designating the derivative as a hedging instrument is no longer appropriate. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, EROP will carry the derivative at its fair value on the balance sheet, recognizing changes in the fair value in current-period earnings. EROP uses interest rate swaps to effectively convert a portion of its variable rate debt to fixed rate, thus reducing the impact of changes in interest rates on interest payments (see Note 10). These instruments are designated as cash flow hedges and the interest differential to be paid or received is recorded as interest expense.

Recent accounting pronouncements

In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)" ("ASU 2014-15"). ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. EROP does not expect ASU 2014-15 to have a material impact on EROP's condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"). The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including the guidance on real estate derecognition for most transactions. ASU 2014-09 provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years and permits the use of either the retrospective or cumulative effect transition method. EROP is currently evaluating the provisions of this guidance.

In April 2014, the FASB issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08"). ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. The guidance is to be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted. EROP adopted ASU 2014-08 as of January 1, 2014.

In February 2013, the FASB issued ASU 2013-04, "Liabilities (Topic 405)" ("ASU 2013-04"), which updated the guidance related to Liabilities to provide guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the

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reporting date. ASU 2013-04 requires the entity to measure these obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The updated guidance also requires an entity to disclose the nature and amount of the obligation as well as certain other information. The guidance is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2013. The adoption did not have a material impact on EROP's condensed consolidated financial statements.

3. Investments in unconsolidated entities

During the nine months ended September 30, 2014, EROP had investments in the following unconsolidated joint ventures that are accounted for under the equity method of accounting:

• 1313 5th Street MN Holdings, LLC, a Delaware limited liability company, 50% owned by the Operating Partnership;

• West Clayton Athens GA Owner, LLC, a Delaware limited liability company, 50% owned by the Operating Partnership;

• Elauwit Networks, a South Carolina limited liability company, 10% owned by the Operating Partnership; and

• University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by the Operating Partnership.

During the nine months ended September 30, 2013, EROP had investments in the following unconsolidated joint ventures that are accounted for under the equity method of accounting:

• 1313 5th Street MN Holdings, LLC, a Delaware limited liability company, 50% owned by the Operating Partnership;

• Joint investment in land, 50% owned by the Operating Partnership;

• Elauwit Networks, a South Carolina limited liability company, 10% owned by the Operating Partnership; and

• University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by the Operating Partnership.

EROP participates in major operating decisions of, but does not control, these entities; therefore, the equity method of accounting is used to account for these investments. The following is a summary of financial information for EROP’s unconsolidated joint ventures for the nine months ended September 30, 2014 and 2013 (in thousands):

	2014			2013
Revenues	$	22,006		$	2,706
Net loss	(1,246		)	(408		)
EROP's equity in losses of unconsolidated entities	(370		)	(102		)

As of September 30, 2014 and December 31, 2013, EROP had $29.0 million and $21.2 million, respectively, of investments in unconsolidated entities classified in other assets in the accompanying condensed consolidated balance sheets. As of September 30, 2014 and December 31, 2013, EROP had $1.6 million and $1.7 million, respectively, in liabilities related to investments in unconsolidated entities where distributions exceeded contributions and equity in earnings and EROP has historically provided financial support; therefore, these investments are classified in accrued expenses in the accompanying condensed consolidated balance sheets.

4. Debt

Revolving credit facility

On January 14, 2013, the Operating Partnership entered into a Fourth Amended and Restated Credit Agreement and, on October 24, 2013, entered into the First Amendment to the agreement which increased the maximum facility from $375.0 million to $500.0 million (as amended, the "Fourth Amended Revolver"). The Fourth Amended Revolver also has an accordion feature to $700.0 million, which may be exercised during the first four years subject to satisfaction of certain conditions. The initial maturity date of the Fourth Amended Revolver is January 14, 2018, and the Operating Partnership may extend the maturity date for one year subject to certain conditions.

Availability under the Fourth Amended Revolver is limited to a “borrowing base availability” equal to the lesser of (i) 60% of the property asset value (as defined in the credit agreement) and (ii) the loan amount, which would produce a debt service coverage ratio of no less than 1.40. As of September 30, 2014, the borrowing base availability was $500.0 million, and the Operating Partnership had $210.0 million outstanding under the Fourth Amended Revolver; thus, the remaining borrowing base availability was $290.0 million.

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The Trust serves as the guarantor for any funds borrowed by the Operating Partnership under the Fourth Amended Revolver. The interest rate per annum applicable to the Fourth Amended Revolver is, at the Operating Partnership’s option, equal to a base rate or the London InterBank Offered Rate (“LIBOR”) plus an applicable margin based upon our leverage. As of September 30, 2014, the effective interest rate applicable to the Fourth Amended Revolver was 1.46%.

The Fourth Amended Revolver contains customary affirmative and negative covenants and contains financial covenants that, among other things, require EROP and its subsidiaries to maintain certain minimum ratios of EBITDA (earnings before payment or charges of interest, taxes, depreciation, amortization or extraordinary items) as compared to interest expense and total fixed charges. The financial covenants also include consolidated net worth and leverage ratio tests, and the Trust is prohibited from making distributions in excess of 95% of funds from operations except to comply with the legal requirements to maintain its status as a REIT. As of September 30, 2014, EROP was in compliance with all covenants of the Fourth Amended Revolver.

Unsecured term loan facility

On January 13, 2014, the Operating Partnership and certain of its subsidiaries (together with the Operating Partnership, the “Borrowers”), each of which is an indirectly owned subsidiary of EROP, entered into a credit agreement (the "Credit Agreement"), which provides for unsecured term loans in the initial aggregate principal amount of $187.5 million, consisting of a $122.5 million Tranche A term loan with a seven-year maturity (the “Tranche A Term Loan”) and a $65.0 million Tranche B term loan with a five-year maturity (the “Tranche B Term Loan” and, together with the Tranche A Term Loan, the “Term Loans”). The Tranche A Term Loan matures on January 13, 2021 and the Tranche B Term Loan matures on January 13, 2019. The Credit Agreement contains an accordion feature pursuant to which the Borrowers may request that the total aggregate amount of the Term Loans be increased to $250.0 million, which may be allocated to Tranche A or Tranche B, subject to certain conditions, including obtaining commitments from any one or more lenders to provide such additional commitments. EROP used proceeds from the Term Loan to repay a portion of the outstanding balance under the Fourth Amended Revolver.

The interest rate per annum on the Tranche A Term Loan is, at the Borrowers’ option, equal to a base rate or LIBOR plus an applicable margin ranging from 155 to 225 basis points. The interest rate per annum on the Tranche B Term Loan is, at the Borrowers’ option, equal to a base rate or LIBOR plus an applicable margin ranging from 120 to 190 basis points. The applicable margin for the Term Loans is based on leverage.

The Credit Agreement contains customary affirmative and restrictive covenants substantially similar to those contained in EROP’s Fourth Amended Revolver. The Trust serves as the guarantor for any funds borrowed by the Borrowers under the Credit Agreement. As of September 30, 2014, EROP was in compliance with all covenants of the Credit Agreement.

In connection with entering into the Credit Agreement, EROP entered into multiple interest rate swaps with notional amounts totaling $187.5 million to hedge the interest payments on the LIBOR-based Term Loans (see Note 10). As of September 30, 2014, the effective interest rate on the Tranche A Term Loan was 3.85% (weighted average swap rate of 2.30% plus the current margin of 1.55%) and the effective interest rate on the Tranche B Term Loan was 2.86% (weighted average swap rate of 1.66% plus the current margin of 1.20%).

Mortgage and construction debt

Master Secured Credit Facility

EROP has a credit facility with Fannie Mae (the "Master Secured Credit Facility") that was entered into on December 31, 2008 and expanded on December 2, 2009. All notes under the Master Secured Credit Facility contain cross-default provisions, and all properties securing the notes are cross-collateralized. EROP was in compliance with all financial covenants, including consolidated net worth and liquidity tests, contained in the Master Secured Credit Facility as of September 30, 2014. As of September 30, 2014 and December 31, 2013, EROP had $160.4 million and $169.7 million, respectively, of mortgage loans outstanding under the Master Secured Credit Facility bearing interest at a weighted average fixed interest rate of 5.91%.

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Mortgage debt

As of September 30, 2014, EROP had outstanding mortgage indebtedness of $81.1 million (excluding an unamortized debt premium of $1.7 million). Of the total mortgage debt outstanding at September 30, 2014, $47.1 million relates to mortgage debt bearing interest at fixed rates ranging from 4.2% to 5.6% and $34.0 million relates to mortgage debt bearing interest at variable rates at a weighted average effective interest rate of 2.29%. The mortgage debt outstanding is secured by underlying collegiate housing properties.

In February 2014, EROP repaid in full variable rate mortgage debt of $35.7 million that was assumed in connection with the 2011 acquisition of the GrandMarc at Westberry Place collegiate housing community located at Texas Christian University. The interest rate was equal to a base rate plus a 4.85% margin, and the loan was scheduled to mature on January 1, 2020. In connection with this repayment, EROP recognized a $0.6 million loss on extinguishment of debt.

On July 1, 2014, in connection with the sale of Pointe West collegiate housing community located at University of South Carolina, EROP repaid a mortgage debt of $9.5 million in full. The interest rate was equal to 4.92% and the mortgage debt was scheduled to mature on August 1, 2014.

On July 14, 2014, EROP repaid $7.2 million of mortgage debt that was part of the Master Secured Credit Facility. The interest rate was 4.96% and the mortgage debt was scheduled to mature on January 1, 2015. Simultaneously with the sale of The Reserve on South College, the community was released from the Master Secured Credit Facility (see Note 8). In connection with this pay off, EROP recognized a $0.1 million loss on extinguishment of debt.

Construction loans

As of September 30, 2014, EROP had construction loans outstanding of $60.5 million related to the following collegiate housing developments: The Retreat serving the University of Mississippi and Roosevelt Point serving Arizona State University - Downtown Phoenix Campus. Interest on these construction loans is at variable rates at a weighted average effective interest rate of 2.22%.

In April 2014, EROP repaid in full variable rate construction debt with an outstanding principal balance of $32.3 million related to the development of The Oaks on the Square (Phase I and II). The effective interest rate was equal to 2.41% and the loan was scheduled to mature on October 30, 2015.

On September 30, 2014, EROP repaid in full variable rate construction debt with an outstanding balance of $8.2 million related to the development of The Oaks on the Square (Phase III) serving the University of Connecticut. The effective interest rate was equal to 2.10% and the loan was scheduled to mature on September 11, 2017. In connection with this pay off, EROP recognized a $0.1 million loss on extinguishment of debt.

On July 9, 2014, EROP entered into a construction loan agreement related to the development of a jointly owned cottage-style community located in Louisville, Kentucky (The Retreat at Louisville). EROP is the majority owner and will the manage the community once it is completed. The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.05% margin or LIBOR plus a 2.05% margin and is interest only though July 10, 2017. On July 10, 2017, if certain conditions are met, EROP has the option to extend the loan until July 9, 2018 and another year thereafter. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. As of September 30, 2014, there were no amounts outstanding under the construction loan.

In connection with the acquisition of The Varsity serving the University of Michigan during the year ended December 31, 2013, EROP assumed a construction loan in the amount of $32.4 million. The interest rate per year applicable to the loan is equal to LIBOR plus a 2.25% margin and is interest only through August 1, 2015. As of September 30, 2014, the effective interest rate applicable to the loan was 2.40%. On August 1, 2015, if certain conditions for extension are met, EROP has the option to extend the loan until August 1, 2017. During the extension period, if applicable, principal and interest are to be repaid on a monthly basis.

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The scheduled maturities of outstanding mortgage and construction indebtedness as of September 30, 2014 are as follows (in thousands):

Fiscal Year Ending December 31,
2014 (3 months ending December 31, 2014)	$	896
2015	96,983
2016	124,672
2017	39,068
2018	1,635
Thereafter	71,166
Total	334,420
Debt premium	1,694
Outstanding as of September 30, 2014, net of unamortized debt premium	$	336,114

As of September 30, 2014, the outstanding mortgage and construction debt had a weighted average effective interest rate of 4.39% and carried a weighted average term of 2.04 years.

5. Segments

EROP defines business segments by their distinct customer base and service provided. EROP has identified three reportable segments: collegiate housing leasing, development consulting services and management services. Management evaluates each segment’s performance based on net operating income, which is defined as income before depreciation, amortization, ground leases, impairment losses, interest expense (income), gains on insurance settlements, gains (losses) on extinguishment of debt, gains (losses) on sale of collegiate housing properties, income taxes, equity in earnings (losses) of unconsolidated entities, noncontrolling interests and discontinued operations. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intercompany fees are reflected at the contractually stipulated amounts.

The following tables represent EROP’s segment information for the nine months ended September 30, 2014 and 2013 (in thousands):

		Nine Months Ended September 30,
		2014		2013
Collegiate Housing Leasing:
	Collegiate housing leasing revenue	$	144,677	$	116,338
	Collegiate housing leasing operating expenses	70,062		59,430
	Net operating income	$	74,615	$	56,908
	Total segment assets at end of period (1)	$	1,750,705	$	1,473,665
Development Consulting Services:
	Third-party development consulting services revenue	$	5,264	$	1,989
	General and administrative expenses	1,922		1,396
	Net operating income	$	3,342	$	593
	Total segment assets at end of period(2)	$	4,941	$	6,097
Management Services:
	Third-party management services revenue	$	2,856	$	2,710
	General and administrative expenses	1,933		1,898
	Net operating income	$	923	$	812
	Total segment assets at end of period(2)	$	9,106	$	10,965

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		Nine Months Ended September 30,
		2014			2013
Reconciliations:
	Segment revenue	$	152,797		$	121,037
	Operating expense reimbursements	6,492			8,141
	Total revenues	$	159,289		$	129,178
	Segment operating expenses	$	73,917		$	62,724
	Reimbursable operating expenses	6,492			8,141
	Total operating expenses	$	80,409		$	70,865
	Segment net operating income	$	78,880		$	58,313
The following is a reconciliation of the reportable segments’ net operating income to EROP’s consolidated income (loss) before income taxes, discontinued operations and gain on sale of collegiate housing properties for the nine months ended September 30, 2014 and 2013 (in thousands):
		Nine Months Ended September 30,
		2014			2013
	Segment net operating income	$	78,880		$	58,313
	Other unallocated general and administrative expenses	(10,629		)	(7,623		)
	Depreciation and amortization	(42,928		)	(33,548		)
	Ground lease	(6,162		)	(5,631		)
	Loss on impairment of collegiate housing properties	(12,734		)	—
	Nonoperating income (expenses)	270			(13,374		)
	Equity in losses of unconsolidated entities	(370		)	(102		)
	Income (loss) before income taxes, discontinued operations and gain on sale of collegiate housing properties	$	6,327		$	(1,965	)
(1) The increase in segment assets related to collegiate housing leasing is primarily related to the opening of seven new properties and two property acquisitions in 2014 and continued development of five communities for ownership by EROP.
(2) Total segment assets also include goodwill of $2,149 related to the management services and $921 related to devleopment consulting services.

6. Commitments and contingencies

In April 2013, EROP entered into a presale agreement with a private developer that obligated EROP to purchase a newly developed collegiate housing community adjacent to Florida International University for $43.5 million as long as the developer completed the project in time for fall 2014 occupancy. EROP closed on the acquisition of this property in August 2014 (see Note 7).

In July 2012, the collegiate housing community located in St. Louis, Missouri was partially destroyed by a fire. The community was rebuilt and fully reopened in August 2013. This fire caused substantial business interruption and property damage, both of which were covered under EROP's insurance policies. For the nine months ended September 30, 2014 and 2013, EROP recognized business interruption proceeds of $0.1 million and $1.6 million, respectively. These amounts are included in collegiate housing leasing revenues in the accompanying condensed consolidated statements of comprehensive income. During the nine months ended September 30, 2014, the insurance claims were settled and EROP recognized a gain on insurance proceeds of $8.1 million in the accompanying condensed consolidated statements of comprehensive income.

The Operating Partnership serves as non-recourse, carve-out guarantor for secured third-party debt in the amount of $23.7 million, held by one unconsolidated joint venture. The loan is scheduled to mature on July 1, 2020. The Operating Partnership is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of the

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Operating Partnership or its employees, agents or affiliates. Therefore, exposure under the guarantee for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates is not expected to exceed the Operating Partnership’s proportionate interest in the related mortgage debt of $5.9 million.

The Operating Partnership, along with a joint venture partner, have jointly and severally guaranteed partial repayment for secured third-party construction debt held by one unconsolidated joint venture under development. The maturity date of the construction loan is December 31, 2015, with an option to extend the maturity date to December 31, 2016, provided certain conditions for extension are met. On December 31, 2016, the joint venture has the ability to further extend the maturity date to December 31, 2017, provided certain conditions for extension are met. The partial repayment guaranty for the construction debt is limited to $8.8 million. In addition, the Operating Partnership serves as a non-recourse, carve-out guarantor for the secured third-party debt and is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates. Therefore, exposure under the guaranties for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates are not expected to exceed the Operating Partnership's proportionate interest in the related mortgage debt in the case of the non-recourse, carve-out guaranty, or in the Operating Partnership's proportionate interest in the partial repayment guaranty of $8.8 million. As of September 30, 2014 and December 31, 2013, the joint venture had $50.8 million and $13.1 million outstanding, respectively, on the construction loans.

The Operating Partnership, along with a joint venture partner, have jointly and severally guaranteed partial repayment for secured third-party construction debt held by one unconsolidated joint venture under development. The maturity date of the construction loan is May 2, 2017, with an option to extend the maturity date to May 2, 2018, provided certain conditions for extension are met. On May 2, 2018, the joint venture has the ability to further extend the maturity date to May 2, 2019, provided certain conditions for extension are met. The partial repayment guaranty for the construction debt is limited to $7.2 million. In addition, the Operating Partnership serves as a non-recourse, carve-out guarantor for the secured third-party debt and is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the joint venture's operating agreement, our joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates. Therefore, exposure under the guaranties for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates are not expected to exceed the Operating Partnership's proportionate interest in the related mortgage debt in the case of the non-recourse, carve-out guaranty, or in the Operating Partnership's proportionate interest in the partial repayment guaranty of $7.2 million. As of September 30, 2014, the joint venture had not drawn on the construction loan.

In connection with the development agreement entered into on July 14, 2010 for a project at the Science + Technology Park at Johns Hopkins Medical Institute (see Note 2), EROP committed to provide a guarantee of repayment of a $42.0 million third-party construction loan for a $3.0 million fee, of which the carrying value approximated fair value. On July 1, 2014, the third-party owners refinanced the construction loan and EROP was released from the guarantee obligations. EROP collected and recognized the $3.0 million guarantee fee during the nine months ended September 30, 2014.

In connection with the condominium agreement related to The Oaks on the Square project in Storrs, Connecticut (see Note 4) the Operating Partnership and LeylandAlliance LLC jointly committed to provide a guarantee of repayment of a $46.4 million construction loan to develop the residential and retail portions of the first two phases of the project. As of December 31, 2013, $43.2 million had been drawn on the construction loan of which $11.8 million was attributable to LeylandAlliance LLC; this amount is not included in our accompanying condensed consolidated financial statements. On April 1, 2014, the construction loan for the first two phases of the project was repaid in full and EROP was released from the guarantee obligations of the construction loan.

During August 2013, the Operating Partnership and LeylandAlliance LLC entered into a $13.8 million construction loan for the third phase of the The Oaks on the Square project. Similar to the construction loan for the first two phases, the Operating Partnership and LeylandAlliance LLC jointly committed to provide a guarantee of repayment for the construction loan. As of December 31, 2013, $1.3 million had been drawn on the construction loan, of which $1.0 million, is attributable to LeylandAlliance LLC; these amounts are not included in our accompanying condensed consolidated financial statements. On September 30, 2014, the construction loan for the third phase of the project was repaid in full and EROP was released from the related guarantee obligations.

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As owners and operators of real estate, environmental laws impose ongoing compliance requirements on EROP. EROP is not aware of any environmental matters or liabilities with respect to the collegiate housing communities that would have a material adverse effect on EROP’s consolidated financial condition or results of operations.

In the normal course of business, EROP is subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of such matters, in management’s opinion, the liabilities, if any, are not expected to have a material effect on our financial position, results of operations or liquidity.

Under the terms of the limited partnership agreement of University Towers Operating Partnership, LP, so long as the contributing owners of such property hold at least 25% of the University Towers Partnership Units, EROP has agreed to maintain certain minimum amounts of debt on the property to avoid triggering a taxable gain to the contributing owners. If EROP fails to do this, EROP must repay the contributing owners the amount of taxes they incur.

7. Acquisition and development of real estate investments

During the nine months ended September 30, 2014, EROP completed the following two collegiate housing property acquisitions:

Name	Primary University Served	Acquisition Date	# of Beds	# of Units	Contract Price (in thousands)
109 Tower	Florida International University Miami, Florida	Aug 2014	542	149	$	43,500
District on Apache	Arizona State University Tempe, Arizona	Sept 2014	900	279	$	89,800

Combined acquisition costs for these purchases were $0.9 million and are included in general and administrative expenses in the accompanying condensed consolidated statement of comprehensive income for the nine months ended September 30, 2014. EROP funded these acquisitions with proceeds from draws on EROP's Fourth Amended Revolver (see Note 4) and cash on hand. Due to the timing of the completion of the acquisitions, work is still ongoing to determine the fair value of those assets and liabilities as of the acquisition date. The purchase price allocation is expected to be finalized by December 31, 2014.  A preliminary allocation of the purchase price to the fair values of assets acquired and liabilities assumed as of the dates of the acquisitions are as follows (in thousands):

	109 Tower			District on Apache			Total
Collegiate housing properties	$	43,384		$	89,216		$	132,600
Goodwill and other intangibles, net	—			643			643
Other assets	200			36			236
Current liabilities	(746		)	(1,341		)	(2,087		)
Total net assets acquired	$	42,838		$	88,554		$	131,392

The difference between the collegiate housing property acquisition contract prices of $133.3 million and the total net assets acquired of $131.4 million is primarily due to $1.9 million of net liabilities assumed.

The actual revenue and net income since the acquisition and the unaudited pro forma revenue and net income had the acquisition date been January 1, 2013, are as follows:

	Revenue		Net income		Net income attributable to unitholders per share - basic and diluted
	(in thousands)
Actual from date of acquisition – 9/30/14	$	1,030	$	52	$	—
2014 supplemental proforma for 1/1/14 – 9/30/14 (1)	$	165,458	$	28,383	$	0.23
2013 supplemental proforma for 1/1/13 – 9/30/13 (1)	$	130,576	$	3,014	$	0.03

⁽¹⁾ Supplemental pro forma earnings for the nine months ended September 30, 2014 were adjusted to exclude $0.4 million of acquisition-related costs incurred during the nine months ended September 30, 2014. Supplemental pro forma earnings for the nine months ended September 30, 2013 were adjusted to include these charges. As 109 Tower opened for the 2014/2015 lease year, the supplemental pro forma revenue and net income for the period January 1, 2013 - September 30, 2013 only includes The District on Apache. In addition, as The District on Apache opened for the 2013/2014 lease year, the supplemental pro forma revenue and net income for January 1, 2013 to September 30, 2013 does not include a full year of operations.

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During the year ended December 31, 2013, EROP completed the following three collegiate housing property acquisitions:

Name	Primary University Served	Acquisition Date	# of Beds	# of Units	Contract Price (in thousands)
The Cottages on Lindberg	Purdue University West Lafayette, Indiana	Aug 2013	745	193	$36,000
The Retreat at State College	Pennsylvania State University State College, Pennsylvania	Sept 2013	587	138	$56,189
The Varsity	University of Michigan Ann Arbor, Michigan	Dec 2013	415	181	$53,950

Combined acquisition costs for these purchases were $0.4 million. EROP funded these acquisitions with assumed debt of $32.4 million and proceeds from draws on EROP's Fourth Amended Revolver. A summary follows of the fair values of the assets acquired and the liabilities assumed as of the dates of the acquisitions (in thousands):

	The Cottages on Lindberg			The Retreat at State College			The Varsity			Total
Collegiate housing properties	$	35,704		$	55,812		$	53,630		$	145,146
Other assets	347			442			481			1,270
Current liabilities	(689		)	(405		)	(449		)	(1,543		)
Mortgage debt	—			—			(32,420		)	(32,420		)
Total net assets acquired	$	35,362		$	55,849		$	21,242		$	112,453

The difference between the collegiate housing property acquisition contract prices of $146.1 million and the total net assets acquired of $112.5 million is $1.2 million of net assets purchased or liabilities assumed and $32.4 million of assumed debt (see Note 4).

The actual revenue and net income since the acquisition and the unaudited pro forma revenue and net income had the acquisition date been January 1, 2013, are as follows:

	Revenue		Net income		Net income attributable to unitholders per share - basic and diluted
	(in thousands)
Actual from date of acquisition – 9/30/13	$	719	$	400	$	—
2013 supplemental pro forma for 1/1/13 – 9/30/13(1)	$	132,100	$	3,004	$	0.03

⁽¹⁾ Supplemental pro forma earnings for the nine months ended September 30, 2013 were adjusted to exclude $0.2 million of acquisition-related costs incurred in 2013.

Development of collegiate housing properties

In June 2014, EROP announced an agreement with a subsidiary of Landmark Property Holdings, LLC ("Landmark") to develop, own and manage a new 656-bed cottage-style collegiate housing property adjacent to The University of Louisville. EROP is the majority owner and managing member of the joint venture and will manage the community once completed. As of September 30, 2014, EROP and Landmark have incurred minimal costs for the project. The community is expected to open in the summer of 2015.

In March 2013, EROP announced an agreement with Javelin 19 Investments, LLC ("Javelin 19") to develop, own and manage a new collegiate housing property near Duke University, 605 West. EROP is the majority owner and managing member of the joint venture and manages the community, which opened in August 2014. As of September 30, 2014, EROP and Javelin 19 had incurred $44.6 million in costs for the project. During the nine months ended September 30, 2014 and 2013, EROP capitalized interest costs of $0.6 million and $0.2 million, respectively, and internal development project costs of approximately $0.1 million for both periods related to the development. For a period of five years from the date on which the property receives its initial certificate of occupancy, Javelin 19 has the right to require EROP to purchase Javelin 19’s 10% interest in the joint venture at a price to be determined.

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In December 2011, EROP was selected by the University of Kentucky to develop, own and manage new collegiate housing on its campus. This project will be financed through EROP’s On-Campus Equity Plan, or the ONE Plan ^SM. As of September 30, 2014, EROP had incurred $52.9 million in costs for the 2014, 2015 and 2016 deliveries. Phase I opened in August 2013, Phase II opened for the 2014-2015 lease year, Phase II-B is expected to open in the summer of 2015 and the 2016 deliveries are expected to open in the summer of 2016. During the nine months ended September 30, 2014 and 2013, EROP capitalized interest costs of $2.9 million and $1.0 million, respectively, and internal development costs of $0.8 million and $0.6 million, respectively, related to the developments.

In November 2011, EROP purchased a collegiate housing property near the University of Colorado, Boulder (The Lotus). EROP developed additional housing on the existing land, which opened for the 2014/2015 lease year. As of September 30, 2014, EROP had incurred $21.1 million in project costs. During the nine months ended September 30, 2014 and 2013, EROP capitalized interest costs of $0.3 million and $73.8 thousand, respectively, and internal development project costs of $0.1 million and $65.9 thousand, respectively, related to the development.

In September of 2010, LeylandAlliance LLC and EROP entered into an agreement to develop the first two phases of Storrs Center, a mixed-use town center project, adjacent to the University of Connecticut. EROP developed, owns and manages the collegiate housing properties in these first two phases and both phases include commercial and residential offerings. The first phase opened in August 2012 and the second phase opened in August 2013. LeylandAlliance LLC and EROP subsequently entered into additional agreements to develop the third and fourth phases of the project. As of September 30, 2014, EROP had incurred $19.8 million in project costs for the third and fourth phases. During the nine months ended September 30, 2014 and 2013, EROP capitalized interest costs of $90.5 thousand and $0.6 million, respectively, and capitalized internal development project costs of approximately $0.1 million and $15.8 thousand, respectively, related to the developments. The third phase opened in August 2014 and the fourth phase is scheduled to be completed in the summer of 2015.

All costs related to the development of collegiate housing communities are classified as assets under development in the accompanying condensed consolidated balance sheets until the community is completed and opened.

8. Disposition of real estate investments and discontinued operations

During the nine months ended September 30, 2014, EROP sold The Reserve on West 31st collegiate housing community located in Lawrence, Kansas, the College Station at West Lafayette collegiate housing community located in West Lafayette, Indiana, the Pointe West collegiate housing community located in Cayce, South Carolina and The Reserve on South College collegiate housing community located in Auburn, Alabama for a combined sales price of $71.7 million, and received proceeds of $52.2 million, after payoffs of mortgage debt of $16.7 million (see Note 4) and closing costs. EROP recognized a $19.3 million gain on these dispositions. Two of these properties were sold during the nine months ended September 30, 2014, resulting in a gain of $8.4 million.

On December 19, 2013, EROP sold The Pointe at Western collegiate housing community located in Kalamazoo, Michigan for a sales price of $21.0 million. EROP received proceeds of $20.0 million after closing costs. On June 19, 2013, EROP also sold the College Grove collegiate housing community located in Murfreesboro, Tennessee for a price of $20.7 million. EROP received proceeds of $20.2 million after prorations and closing costs. EROP recognized a $3.9 million gain on the 2013 dispositions, which is reflected in discontinued operations.

As discussed in Note 2, EROP early adopted the accounting guidance related to the presentation of discontinued operations as of January 1, 2014. The four property dispositions in 2014 discussed above and any subsequent one-off dispositions are not expected to qualify for treatment as discontinued operations unless the dispositions qualify as a strategic shift in EROP's business pursuant to ASU 2014-08. The historical operations of all four 2014 property dispositions are presented in continuing operations for all periods presented as the adoption of the guidance is on a prospective basis. Accordingly, the results of operations of the two property dispositions during 2013 are included in discontinued operations in the accompanying condensed consolidated statements of comprehensive income for the nine months ended September 30, 2013.

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The following table summarizes the income from discontinued operations, net of noncontrolling interests, for the nine months ended September 30, 2013 (in thousands):

Collegiate housing leasing revenue	$	4,470
Collegiate housing leasing operating expenses	(2,571		)
Depreciation and amortization	(1,414		)
Interest income	1
Noncontrolling interests	(3		)
Income from discontinued operations attributable to unitholders	483
Gain on sale of collegiate housing properties	3,895
Noncontrolling interests	(28		)
Gain on sale of collegiate housing properties attributable to unitholders	3,867
Income from discontinued operations, net of noncontrolling interests	$	4,350

9. Incentive plans

On May 4, 2011, the Trust's stockholders approved the Education Realty Trust, Inc. 2011 Omnibus Equity Incentive Plan (the “2011 Plan”). The purpose of the 2011 Plan is to promote the interests of the Trust and its stockholders by attracting, motivating and retaining talented executive officers, employees and directors of the Trust and EROP and linking their compensation to the long-term interests of the Trust and its stockholders. The 2011 Plan replaced the Education Realty Trust, Inc. 2004 Incentive Plan (“2004 Plan”) in its entirety and authorizes the grant of the 315,000 shares that remained available for grant under the 2004 plan, as well as 3,147,500 additional shares. As of September 30, 2014, the Trust had 2,464,889 shares of its common stock reserved for issuance pursuant to the 2011 Plan. Automatic increases in the number of shares available for issuance are not provided. The 2011 Plan provides for the grant of stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, other stock-based incentive awards to employees, directors and other key persons providing services to the Trust and EROP.

A restricted stock award is an award of the Trust’s common stock that is subject to restrictions on transferability and other restrictions as the Trust’s compensation committee determines in its sole discretion on the date of grant. The restrictions may lapse over a specified period of employment or the satisfaction of pre-established criteria as the compensation committee may determine. Except to the extent restricted under the award agreement, a participant awarded restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares. Restricted stock is generally taxed at the time of vesting. As of September 30, 2014 and December 31, 2013, unearned compensation related to restricted stock totaled $0.9 million and $0.8 million, respectively, and will be recorded as expense over the applicable vesting period. The value is determined based on the market value of the Trust’s common stock on the grant date. During the nine months ended September 30, 2014 and 2013, compensation expense of $0.5 million and $0.7 million, respectively, was recognized related to the vesting of restricted stock. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income. Effective January 1, 2014 and January 1, 2013, the Trust adopted the 2014 Long-Term Incentive Plan (the "2014 LTIP") and the 2013 Long-Term Incentive Plan (the "2013 LTIP"), respectively. The purpose of the 2014 LTIP and 2013 LTIP is to attract, retain and motivate the executive officers and certain key employees of EROP to promote the long-term growth and profitability of EROP. On January 1, 2014 and 2013, the Trust issued 74,233 and 65,791, respectively, of time vested restricted stock to executives and key employees under the 2014 LTIP and 2013 LTIP. Additional shares were issued in August 2014 pursuant to the 2014 LTIP. The restricted stock granted under the 2014 LTIP and the 2013 LTIP will vest ratably over three years as long as the participants remain employed by EROP.

An RSU award is an award that will vest based upon the Trust’s achievement of total stockholder returns at specified levels as compared to the average total stockholder returns of a peer group of companies and/or the National Association of Real Estate Investment Trusts Equity Index over three years (the “Performance Period”). At the end of the Performance Period, the compensation committee of the Board will determine the level and the extent to which the performance goal was achieved. RSUs that satisfy the performance goal will be converted into fully-vested shares of the Trust’s common stock and EROP will receive a tax deduction for the compensation expense at the time of vesting. Prior to vesting, the participants are not eligible to vote or receive dividends or distributions on the RSUs. On January 1, 2014, the Trust granted 306,914 performance vested RSUs to executives and key employees under the 2014 LTIP described above. On January 1, 2013, the Trust granted a total of 122,180 performance vested RSUs to executives and key employees under the 2013 LTIP described above. As of September

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30, 2014 and December 31, 2013, unearned compensation related to RSUs totaled $1.8 million and $0.9 million, respectively, and will be recorded as expense over the applicable vesting period. The value was determined using a Monte Carlo simulation technique. During the nine months ended September 30, 2014 and 2013, compensation expense of $1.0 million and $0.7 million, respectively, was recognized related to the vesting of RSUs. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income. On January 1, 2014, 203,250 of fully-vested shares of common stock were issued pursuant to the vesting of RSUs granted in 2011.

Pursuant to the terms of a Separation Agreement and Release Agreement (the “Separation Agreement”), dated as of May 12, 2014, between Randall H. Brown and the Trust, Mr. Brown resigned his employment as Chief Financial Officer, effective June 30, 2014. In accordance with the Separation Agreement, all unvested shares of time-vested restricted stock granted to Mr. Brown under the Trust’s long term incentive plan fully vested on June 30, 2014; the Trust settled these shares in cash. In addition, all previously recorded compensation expense was reversed related to unvested RSUs granted to Mr. Brown under the 2012 LTIP, 2013 LTIP and 2014 LTIP plans in the aggregate amount of $0.2 million, the impact of which is recorded in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income.

Total stock-based compensation recognized in general and administrative expense in the accompanying condensed consolidated statements of comprehensive income for the nine months ended September 30, 2014 and 2013 was $1.7 million for both periods.

A summary of the stock-based incentive plan activity is as follows:

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Restricted Stock Award		RSU Awards		Weighted-Average Grant Date Fair Value Per RSU
Outstanding as of December 31, 2013	184,023		(1)	$	8.96	390,275		$	6.78
Granted	77,833			8.90		306,916		6.40
Vested	(73,429	)		8.85		(143,354	)	8.82
Surrendered	(41,997	)		8.95		(113,103	)	8.82
Outstanding as of September 30, 2014	146,430		(1)	$	9.17	440,734		$	6.86

⁽¹⁾ Represents unvested shares of restricted stock awards as of the date indicated.

10. Derivatives and Hedging Activities

Cash Flow Hedges of Interest Rate Risk

EROP’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, EROP primarily uses interest rate swaps as part of its interest rate risk management strategy. During the nine months ended September 30, 2014, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. As of September 30, 2014, EROP had six outstanding interest rate swaps with a combined notional of $187.5 million that were designated as cash flow hedges of interest rate risk. The counter-parties are major financial institutions.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives, which is immaterial for all periods presented, is recognized directly in earnings. During the next twelve months, EROP estimates that an additional $3.6 million will be reclassified to earnings as an increase to interest expense. As of September 30, 2014, the fair value of the derivatives of $2.4 million was included in accrued expenses in the accompanying condensed consolidated balance sheet.

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The following table discloses the effect of the derivative instruments on the condensed consolidated statement of comprehensive income for the nine months ended September 30, 2014 (in thousands):

Derivatives in Cash Flow Hedging Relationships	Amount of Loss Recognized in OCI on Derivative (Effective Portion)			Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
Interest rate contracts	$	(5,021	)	Interest expense	$	2,607

The above contracts are subject to enforceable master netting arrangements that provide a right of offset with each counterparty; however, no offsetting positions exist due to certain duplicate terms across all contracts. Therefore, the derivatives are not subject to offset in the condensed consolidated balance sheets.

Credit-risk-related Contingent Features

EROP has agreements with each of its derivative counterparties that contain a provision where if EROP defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then EROP could also be declared in default on its derivative obligations. In addition, EROP has agreements with each of its derivative counterparties that contain a provision where EROP could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to EROP's default on the indebtedness.

As of September 30, 2014, the fair value of derivatives related to these agreements, which includes accrued interest, but excludes any adjustment for nonperformance risk, was a liability of $2.7 million. As of September 30, 2014, EROP has not posted any collateral related to these agreements. If EROP had breached any of these provisions at September 30, 2014, it could have been required to settle its obligations under the agreements at their termination value of $2.6 million.

11. Fair Value of Financial Instruments

EROP follows the guidance contained in FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures ("ASC 820"). Fair value is generally defined as the exit price at which an asset or liability could be exchanged in a current transaction between willing unrelated parties, other than in a forced liquidation or sale. ASC 820 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data, and requires disclosures for assets and liabilities measured at fair value based on their level in the hierarchy.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level1 - Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 - Observable inputs other than those included in Level 1, for example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

• Level 3 - Unobservable inputs reflecting management's own assumption about the inputs used in pricing the asset or liability at the measurement date.

Non-financial assets measured at fair value on a nonrecurring basis consist of real estate assets and investments in partially owned entities that have been written-down to estimated fair value when it has been determined that asset values are not recoverable. EROP estimates fair value relating to impairment assessments based upon an income capitalization approach (which considers prevailing market capitalization rates and operations of the community) or the negotiated sales price, if applicable. Based upon the inputs used to value properties under the income capitalization approach, EROP determined that valuations under this method are classified within Level 3 of its fair value hierarchy. For the communities for which the estimated fair value was based on negotiated sales prices, EROP determined that its valuation was classified within Level 2 of the fair value hierarchy.

One non-financial asset impaired during the nine months ended September 30, 2014 was also disposed of during the period. The table below summarizes non-financial assets that were impaired during the nine months ended September 30, 2014 and remained on the accompanying condensed consolidated balance sheet as of September 30, 2014 (in thousands):

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			Estimated Fair Value
	Carrying value		Level 1		Level 2		Level 3
Collegiate housing properties, net	$	21,781	$	—	$	21,781	$	—

Currently, EROP uses interest rate swaps to manage its interest raterisk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of ASC 820, EROP incorporates credit valuation adjustments to appropriately reflect both its nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of EROP's derivative contracts for the effect of nonperformance risk, EROP has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although EROP has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. EROP has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of EROP's derivatives held as of September 30, 2014 were classified as Level 2 of the fair value hierarchy.

The table below presents EROP's assets and liabilities measured at fair value on a recurring basis as of September 30, 2014, aggregated by the level in the fair value hierarchy within which those measurements fall. There were no assets and liabilities measured at fair value on a recurring basis as of December 31, 2013. The table below summarizes the carrying amounts and fair values of these financial instruments asof September 30, 2014 (in thousands):

			Estimated Fair Value
	Carrying value		Level 1		Level 2		Level 3
Derivative financial instruments (liability position)	$	2,414	$	—	$	2,414	$	—
Deferred compensation plan assets	486		486		—		—

Financial assets and liabilities that are not measured at fair value in our consolidated financial statements include mezzanine notes receivable and debt. Estimates of the fair values of these instruments are based on EROP's assessments of available market information and valuation methodologies, including discounted cash flow analyses. The table below summarizes the carrying amounts and fair values of these financial instruments asof September 30, 2014 and December 31, 2013 (in thousands):

	September 30, 2014
			Estimated Fair Value
	Carrying value		Level 1		Level 2		Level 3
Mezzanine notes receivable	$	375	$	—	$	313	$	—
Unsecured revolving credit facility	210,000		—		210,000		—
Unsecured term loan facility	187,500		—		187,500		—
Variable rate mortgage and construction loans	126,895		—		126,895		—
Fixed rate mortgage and construction loans	207,525		—		226,080		—

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	December 31, 2013
			Estimated Fair Value
	Carrying value		Level 1		Level 2		Level 3
Mezzanine notes receivable	$	18,125	$	—	$	19,330	$	—
Unsecured revolving credit facility	356,900		—		356,900		—
Variable rate mortgage and construction loans	193,381		—		193,381		—
Fixed rate mortgage and construction loans	227,009		—		239,162		—

EROP discloses the fair value of financial instruments for which it is practicable to estimate. EROP considers the carrying amounts of cash and cash equivalents, restricted cash, student contracts receivable, accounts payable and accrued expenses to approximate fair value due to the short maturity of these instruments. The carrying value of restricted cash approximates its fair value based on the nature of our assessment of the ability to recover these amounts.

12. Subsequent events

The Trust's Board declared a quarterly distribution of $0.12 per share of common stock for the three months ended September 30, 2014. As the distribution is required to be funded by EROP, EROP will make an equivalent distribution to its unitholders on November 15, 2014 to unitholders of record at the close of business on October 31, 2014.

In October 2014, EROP completed the sale of The Pointe at South Florida collegiate housing community serving the University of South Florida for a sales price of $31.0 million and received net proceeds of $29.7 million. This property was considered held for sale at September 30, 2014, and EROP expects to recognize a gain of approximately $2.3 million in the fourth quarter of 2014.

During October 2014, the Operating Partnership and LeylandAlliance LLC entered into a $38.0 million construction loan for the fourth phase of the The Oaks on the Square project. The interest rate per year applicable to the loan is, at the option of EROP, equal to a base rate plus a 1.0% margin or LIBOR plus a 2.0% margin and is interest only though October 20, 2017. On October 21, 2017, if certain conditions are met, EROP has the option to extend the loan until October 19, 2018 and another year thereafter. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. Similar to the construction loan for the first three phases, the Operating Partnership and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment for the construction loan.

On October 24, 2014, the Trust entered into three equity distribution agreements pursuant to which the Trust may issue and sell shares of its common stock having an aggregate gross offering amount of up to $150 million. When stock is sold, the Trust intends to contribute the proceeds to EROP and EROP intends to use the net proceeds to repay the unsecured revolving credit facility (see Note 4), fund its development pipeline, fund acquisitions and for general corporate purposes.

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EX-99.4

EXHIBIT 99.4

Management’s Discussion and Analysis of Financial Condition and Results of Operations

of Education Realty Operating Partnership, L.P.

September 30, 2014

The following discussion and analysis of financial condition and results o operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that are included in Exhibit 99.3 of this Form 8-K. Capitalized terms used, but not defined, in this Management's Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the consolidated financial statements. In this discussion, the terms "we", "us", "our", "EROP", and the "Operating Partnership" refer to Education Realty Operating Partnership, L.P. and its subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements included in this section or elsewhere in this report may be deemed “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations and funds from operations, our strategic plans and objectives, cost management, occupancy and leasing rates and trends, liquidity and ability to refinance our indebtedness as it matures, anticipated capital expenditures (and access to capital) required to complete projects, amounts of anticipated cash distributions to our unitholders in the future and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecast in the forward-looking statements.

Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to:

• risks and uncertainties related to the national and local economies and the real estate industry in general and in our specific markets (including university enrollment conditions and admission policies, and our relationship with these universities);

• volatility in the capital markets;

• rising interest and insurance rates;

• competition from university-owned or other private collegiate housing and our inability to obtain new tenants on favorable terms, or at all, upon the expiration of existing leases;

• availability and terms of capital and financing, both to fund our operations and to refinance our indebtedness as it matures;

• legislative or regulatory changes, including changes to laws governing collegiate housing, construction and real estate investment trusts;

• our possible failure to qualify as a real estate investment trust and the risk of changes in laws affecting real estate investment trusts;

• our dependence upon key personnel whose continued service is not guaranteed;

• our ability to identify, hire and retain highly qualified executives in the future;

• availability of appropriate acquisition and development targets;

• failure to integrate acquisitions successfully;

• the financial condition and liquidity of, or disputes with, our joint venture and development partners;

• impact of ad valorem, property and income taxes;

• changes in generally accepted accounting principles;

• construction delays, increasing construction costs or construction costs that exceed estimates;

• potential liability for uninsured losses and environmental liabilities;

• lease-up risks; and

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• the potential need to fund improvements or other capital expenditures out of operating cash flow.

This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. New factors may also emerge from time to time that could materially and adversely affect us. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative on our financial condition, results of operations, liquidity and certain other factors that may affect our future results from the perspective of our management. Our MD&A is presented in eleven sections:

• Overview

• Our Business Segments

• Trends and Outlook

• Critical Accounting Policies

• Results of Operations

• Liquidity and Capital Resources

• Distributions

• Off-Balance Sheet Arrangements

• Non GAAP Measures

• Inflation

• Recent Accounting Pronouncements

Overview

We are a Delaware limited partnership that is, engaged in the ownership, acquisition, development and management of high-quality collegiate housing communities. We also provide collegiate housing management and development consulting services to universities, charitable foundations and other third parties. We believe that we are one of the largest private owners, developers and managers of high-quality collegiate housing communities in the United States in terms of total beds both owned and under management.

We earn income from rental payments we receive as a result of our ownership of collegiate housing communities. We also earn income by performing property management services and development consulting services for third parties through our Management Company and our Development Company, respectively.

The general partner of Education Realty Operating Partnership, L.P. ("EROP") is Education Realty OP GP, Inc. ("OP GP"), an entity that is wholly owned by Education Realty Trust, Inc. (the "Trust"), which is publicly traded on the New York Stock Exchange ("NYSE") under the ticker symbol "EDR". The limited partners of EROP are Education Realty OP Limited Partner Trust, a wholly owned subsidiary of the Trust, and other limited partners consisting of current and former members of management and non-affiliated third parties. The Trust has elected to be taxed as a real estate investment trust ("REIT") for federal income tax purposes.

Our Business Segments

We define business segments by their distinct customer base and the service provided. Management has identified three reportable segments: collegiate housing leasing, development consulting services and management services. We evaluate each segment’s performance based on net operating income, which is defined as net income before depreciation, amortization, ground leases, impairment losses, interest expense (income), gains on insurance settlements, gains (losses) on extinguishment of debt, gains (losses) on sale of collegiate housing properties, income taxes, equity in earnings of unconsolidated entities, noncontrolling interests and discontinued operations. The accounting policies of the reportable segments are described in more detail in the summary of significant accounting policies in the notes to the accompanying condensed consolidated financial statements.

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Collegiate housing leasing

Collegiate housing leasing revenue represented approximately 94.7% of our total revenues, excluding operating expense reimbursements and other adjustments/eliminations included in our segment reporting, for the nine months ended September 30, 2014. Unlike multi-family housing where apartments are leased by the unit, collegiate-housing communities are typically leased by the bed on an individual lease liability basis. Individual lease liability limits each resident’s liability to his or her own rent without liability for a roommate’s rent. The number of lease contracts that we administer is therefore equivalent to the number of beds occupied instead of the number of apartment units occupied. A parent or guardian is required to execute each lease as a guarantor unless the resident provides adequate proof of income and/or pays a deposit, which is usually equal to two months rent.

Due to our predominantly private bedroom accommodations and individual lease liability, the high level of student-oriented amenities and the fact that most units are furnished and typically rent includes utilities, cable television and internet service, we believe our communities in most cases can command higher per-unit and per-square foot rental rates than most multi-family communities in the same geographic markets. We are also typically able to command higher rental rates than on-campus collegiate housing, which tends to offer fewer amenities.

The majority of our leases commence in mid-August and terminate the last day of July. These dates generally coincide with the commencement of the universities’ fall academic term and the completion of the subsequent summer school session. With the addition of on-campus communities under our ONE Plan^SM, our portfolio contains a growing number of communities with ten-month leases that typically run from August to May. Due to the nature of our leases, we are required to re-lease each community in its entirety each year, resulting in significant turnover in our tenant population from year to year. In 2014 and 2013, approximately 72.2% and 81.3%, respectively, of our leased beds were to students who were first-time residents at our communities. As a result, we are highly dependent upon the effectiveness of our marketing and leasing efforts during the annual leasing season that typically begins in November and ends in August of each year. Our communities’ occupancy rates are therefore typically stable during the August to July (or May with respect to communities under our ONE Plan^SM) academic year but are susceptible to fluctuation at the commencement of each new academic year.

Prior to the commencement of each new lease period, mostly during the first two weeks of August, but also during September at some communities, we prepare the units for new incoming tenants. Other than revenue generated by in-place leases for returning tenants, we do not generally recognize lease revenue during this period referred to as “Turn,” as we have no leases in place. In addition, we incur significant expenses during Turn to make our units ready for occupancy. These expenses are recognized when incurred. This Turn period results in seasonality in our operating results during the third quarter of each year.

Development consulting services

For the nine months ended September 30, 2014, revenue from our development consulting services represented approximately 3.4% of our total revenues, excluding operating expense reimbursements and other adjustments/eliminations included in our segment reporting. We provide development consulting services primarily to colleges and universities seeking to modernize their on-campus collegiate housing communities, to other third-party investors and to our collegiate housing leasing segment in order to develop communities for our ownership. Our development consulting services typically include the following:

• market analysis and evaluation of collegiate housing needs and options;

• oversight of and cooperation with college or university in architectural design;

• negotiation of ground lease, development agreement, construction contract, architectural contract and bond documents;

• coordination of governmental and university plan approvals;

• oversight of construction process;

• design, purchase and installation of furniture;

• pre-opening marketing to students; and

• obtaining final approvals of construction.

Fees for these services are typically 3 – 5% of the total cost of a project and are payable over the life of the construction period, which in most cases is one to two years in length. Occasionally, the development consulting contracts include a provision whereby we can participate in project savings resulting from successful cost management efforts. These revenues are recognized once all contractual terms have been satisfied and no future performance requirements exist. This typically occurs after construction is complete. As part of the development agreements, there are certain costs we pay on behalf of universities or third-party investors. These costs are included in reimbursable operating expenses and are required to be reimbursed to us by the universities or third-party investors. We recognize the expense and revenue related to these reimbursements when incurred.

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These operating expenses are wholly reimbursable and therefore not considered by management when analyzing the operating performance of our development consulting services business.

Management services

For the nine months ended September 30, 2014, revenue from our management services segment represented approximately 1.9% of our total revenues, excluding operating expense reimbursements and other adjustments/eliminations included in our segment reporting. We provide management services for collegiate housing communities owned by educational institutions, charitable foundations, EROP and others. Our management services typically cover all aspects of community operations, including residence life and student development, marketing, leasing administration, strategic relationships, information systems and accounting services. We provide these services pursuant to multi-year management agreements under which management fees are typically 3 – 5% of leasing revenue. These agreements usually have an initial term of two to five years with renewal options of like terms. As part of the management agreements, there are certain payroll and related expenses we pay on behalf of the property owners. These costs are included in reimbursable operating expenses and are required to be reimbursed to us by the property owners. We recognize the expense and revenue related to these reimbursements when incurred. These operating expenses are wholly reimbursable and therefore not considered by management when analyzing the operating performance of our management services business.

Trends and Outlook

Rents and occupancy

We manage our communities to maximize revenues, which are primarily driven by two components: rental rates and occupancy. We customarily adjust rental rates in order to maximize revenues, which in some cases results in a lower occupancy rate, but in most cases results in stable or increasing revenue from the community. As a result, a decrease in occupancy may be offset by an increase in rental rates and may not be material to our operations. Periodically, certain of our markets experience increases in new on-campus collegiate housing provided by colleges and universities and off-campus collegiate housing provided by private owners. This additional collegiate housing both on and off campus can create competitive pressure on rental rates and occupancy.

Over the last couple of years, there has been an increase in supply across the student housing industry. However, in the markets we serve, we expect the pace of new supply growth in 2015 to decline 15% from the pace in 2014. We are projecting a 1.6% increase in supply in 2015, which is slightly outpacing enrollment growth in our markets where the three-year compounded annual enrollment growth rate is 1.5%. Although these statistics in themselves are not favorable, the gap between supply growth and enrollment growth is not large, the pace of new supply is slowing, and we believe that enrollment growth alone does not reflect total demand as there is pent-up demand that exists for new, purpose-built student housing product, where students are moving out of old, outdated housing, and into newer communities with more amenities. This is evidenced by the 5% growth in same-community revenue we achieved in our 2013-2014 leasing cycle and 4% growth we achieved for the current 2014-2015 lease year, as well as other market data. As a result, we believe that the growth characteristics of our well-located portfolio, which has produced a compounded annual revenue growth of 4.4% over the last five years, has not changed significantly.

We define our same-community portfolio as properties that were owned and operating for the full nine months ended September 30, 2014 and 2013, are not conducting or planning to conduct substantial development or redevelopment activities, are not classified as discontinued operations or have not been sold or are under contract pending sale. The collegiate housing community referred to as 3949 at Saint Louis University is excluded from our same-community portfolio as it was damaged by fire on July 17, 2012. The community was insured and reopened in August 2013. This property is the only community excluded from same-community as a result of redevelopment activities. During the nine months ended September 30, 2014, we sold The Reserve on West 31st located in Lawrence, Kansas, the College Station at West Lafayette located in West Lafayette, Indiana, the Pointe West located in Cayce, South Carolina and The Reserve on South College located in Auburn, Alabama. These four collegiate housing communities are also excluded from our same-community portfolio as they have been sold. The collegiate housing community referred to as The Pointe at South Florida serving the University of South Florida met the held for sale accounting criteria as of September 30, 2014 and as a result, was also excluded from our same-community portfolio. This property was subsequently sold in October 2014 (see Note 12 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K).

Our communities’ occupancy rates are typically stable during the August to July academic year but are susceptible to fluctuation at the commencement of each new academic year. For the nine months ended September 30, 2014, same-

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community revenue per occupied bed increased to $629 and same-community physical occupancy increased to 90.0%, compared to same-community revenue per occupied bed of $611 and same-community physical occupancy of 89.9% for the nine months ended September 30, 2013. The results represent averages for our same-community portfolio, which are not necessarily indicative of every community in the portfolio. Individual communities can and do perform both above and below these averages, and, at times, an individual community may experience a decline in total revenue due to university and local economic conditions. Our management focus is to assess these situations and address them quickly in an effort to minimize our exposure and reverse any negative trends.

The same-community leasing portfolio opened the 2014/2015 lease term with a 4% increase in rental revenue. Opening occupancy was up 200 basis points to 96.3% and net rental rates opened the term 2% above the prior year. New-communities opened the 2014/2015 lease term with an average occupancy of 96.1%.

Development consulting services

For the nine months ended September 30, 2014 and 2013, third-party development fee revenue was $5.3 million and $2.0 million, respectively. Third-party development fee revenue recognized during the nine months ended September 30, 2014 includes $2.6 million recognized related to previously deferred fees on the participating project at Johns Hopkins University (see Note 2 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). Over the last couple of years we have had approximately two to three third-party development consulting projects per year. As more universities are turning toward private industry to fund and own new collegiate housing projects, we expect future project volume to remain around these levels. We delivered two third-party projects in August 2014, and we are currently providing third-party development services pursuant to signed definitive contracts with projects under construction at Clarion University of Pennsylvania and East Stroudsburg University - Pennsylvania Phase II.

We develop collegiate housing communities for our ownership, and we plan to increase self-development activity going forward. The On-Campus Equity Plan, or The ONE Plan^SM, is our private equity program for universities, which allows universities to use our equity and financial stability to develop and revitalize campus housing while preserving their credit capacity for other campus projects. This program is designed to provide our equity to solve a university’s housing needs through a ground lease structure where EROP owns the land improvements and operates the community. Others in the industry have similar programs and to date we have ten ONE Plan^SM projects completed or underway. In December 2011, EROP was selected by the University of Kentucky ("UK"), to negotiate the potential revitalization of UK's entire campus housing portfolio and expansion of UK's campus housing portfolio to more than 9,000 beds within five to seven years. We refer to this project as the UK Campus Housing Revitalization Plan. Phase I of the UK Campus Housing Revitalization Plan, a 601-bed community called Central Hall I & II, opened in August 2013 with all beds leased. Phase II, which includes four communities with 2,381 beds for a total project cost of approximately $138.0 million, opened in August 2014 with all beds leased. Construction on the 2015 deliveries is on-track to deliver 1,610 beds for a total cost of $101.2 million and the 2016 deliveries of 1,141 beds for a total cost of $83.9 million are also underway. We view our entry into the partnership with UK as a defining moment, not only for EdR, but also for our industry. Most state universities face many of the same challenges as UK, including reduced support from constrained state budgets, aged on-campus housing and demands on institutional funds for academic and support services. We believe this declining state support for higher education is the norm rather than the exception. These external factors provide a great opportunity for us. As universities can see the progress of the UK Campus Revitalization Plan, the volume of discussions we are having with other universities continues to increase as additional universities investigate this type of structure to replace their aging on-campus housing stock. We expect the volume of true third-party fee development contracts to be stagnant or decline as more universities avail themselves of this new program.

While considering the possible shift in the type of projects universities pursue, the amount and timing of future revenue from development consulting services will be contingent upon our ability to successfully compete in public colleges and universities’ competitive procurement processes, our ability to successfully structure financing of these projects and our ability to ensure completion of construction within committed timelines and budgets. To date, we have completed construction on all of our development consulting projects in time for their targeted occupancy dates.

Collegiate housing operating costs

Same-community operating expenses have increased at a 2.3% compounded annual growth rate for the last four years, including 2013. Excluding real estate taxes, which are our most variable expenses and drove a 4.2% increase in expenses in 2013, our operating expenses have been relatively flat during the four year period. We expect full year same-community operating expenses to increase between 3-4% going forward, which we believe is a reasonable level of growth for the foreseeable future.

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General and administrative costs

General and administrative costs (before development pursuit costs, acquisition costs and severance) increased 4.1% in 2013 and 9.5% in 2012. With the 21% growth in gross assets in 2013 and the recently completed 2014 developments and acquisitions increasing gross assets by 25% in 2014, we expect general and administrative costs to continue to increase at a double digit rate in 2014 to support the growth in our asset base.

Asset repositioning and capital recycling

Starting in 2010, we have made a concerted effort to reposition and improve our owned portfolio with a significant part of the process completed prior to 2014. Since 2009, we have acquired $815 million of collegiate housing communities, completed $494 million of developments and disposed of $342 million of collegiate housing communities, including the disposition of The Pointe at South Florida (see Note 12 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). These transactions have improved our median distance to campus to 0.1 miles and increased our average rental rate to $683. Currently, 71% of our beds and 75% of our community NOI are located on or pedestrian to campus.

In August 2014, we completed seven development projects for our ownership with project costs of $213.2 million within walking distance of universities such as University of Colorado, Duke University and University of Connecticut and directly on the campus of University of Kentucky (see Note 7 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K).

Also in August 2014, we completed the presale acquisition of a collegiate housing property adjacent to Florida International University in Miami, FL for $43.5 million. This acquisition increased our portfolio by an additional 542 beds.

In September 2014, we also purchased The District on Apache, a 900-bed collegiate housing community located adjacent to the Arizona State University campus for $89.8 million in cash.

We have five active owned development projects with anticipated aggregate project costs of $330.7 million that are within walking distance of universities such as Georgia, Connecticut and Louisville and directly on the campus of the University of Kentucky (see Note 7 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). These developments, which are scheduled to open in 2015 and 2016, will increase our portfolio by 4,089 beds. In addition, these developments have an average distance to campus of less than 0.1 miles, are located on or near universities with average enrollment of 22,467, and will produce an average rental rate of $830 per bed.

Our asset repositioning and capital recycling efforts included the following transactions during the nine months ended September 30, 2014:

• In March 2014, we sold The Reserve on West 31st a non-pedestrian collegiate housing community at to the University of Kansas, for net cash proceeds of $14.0 million after closing costs; and

• Also in March 2014, we sold the College Station at West Lafayette non-pedestrian collegiate housing community in Kalamazoo, Michigan, for net cash proceeds of $27.9 million after closing costs.

• In July 2014, we sold Pointe West a non-pedestrian collegiate housing community serving the University of South Carolina, and The Reserve on South College serving Auburn University, for aggregate net cash proceeds of $29.9 million after closing costs.

• Subsequent to September 30, 2014, we have completed the sale of The Pointe at South Florida, a 1,002-bed community built in 1999 that is not pedestrian to the University of South Florida’s campus. The net proceeds from this disposition of approximately $29.7 million were used to pay down the Fourth Amended Revolver.

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Critical Accounting Policies

There have been no significant changes to our critical accounting policies as disclosed in Note 2 to the consolidated financial statements included in Exhibit 99.1 of this Form 8-K.

Recent Accounting Pronouncements

A discussion of recent accounting pronouncements affecting EROP is included in Note 2 of the condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K.

Results of Operations for the Nine Months Ended September 30, 2014 and 2013

The following table presents our results of operations for the nine months ended September 30, 2014 and 2013 (amounts in thousands):

		Nine Months Ended September 30,
		2014			2013			Change ($)			Change (%)
Collegiate Housing Leasing:
	Collegiate housing leasing revenue	$	144,677		$	116,338		$	28,339		24.4	%
	Collegiate housing leasing operating expenses	70,062			59,430			10,632			17.9	%
	Net operating income	$	74,615		$	56,908		$	17,707		31.1	%
Development Consulting Services:
	Third-party development consulting services revenue	$	5,264		$	1,989		$	3,275		164.7	%
	General and administrative expenses	1,922			1,396			526			37.7	%
	Net operating income	$	3,342		$	593		$	2,749		463.6	%
Management Services:
	Third-party management services revenue	$	2,856		$	2,710		$	146		5.4	%
	General and administrative expenses	1,933			1,898			35			1.8	%
	Net operating income	$	923		$	812		$	111		13.7	%
Reconciliations:
	Segment revenue	$	152,797		$	121,037		$	31,760		26.2	%
	Operating expense reimbursements	6,492			8,141			(1,649		)	(20.3	)%
	Total revenues	$	159,289		$	129,178		$	30,111		23.3	%
	Segment operating expenses	$	73,917		$	62,724		$	11,193		17.8	%
	Reimbursable operating expenses	6,492			8,141			(1,649		)	(20.3	)%
	Total operating expenses	$	80,409		$	70,865		$	9,544		13.5	%
	Segment net operating income	$	78,880		$	58,313		$	20,567		35.3	%
	Other unallocated general and administrative expenses	(10,629		)	(7,623		)	(3,006		)	39.4	%
	Depreciation and amortization	(42,928		)	(33,548		)	(9,380		)	28.0	%
	Ground lease	(6,162		)	(5,631		)	(531		)	9.4	%
	Loss on impairment of collegiate housing properties	(12,734		)	—			(12,734		)	—	%
	Nonoperating (expenses) income	270			(13,374		)	13,644			(102.0	)%
	Equity in losses of unconsolidated entities	(370		)	(102		)	(268		)	262.7	%
	Income (loss) before income taxes, discontinued operations and gain from sale of collegiate housing communities	$	6,327		$	(1,965	)	$	8,292		(422.0	)%

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Collegiate housing leasing

Collegiate housing operating statistics for owned communities and same-communities for the nine months ended September 30, 2014 and 2013 were as follows:

	Nine months ended September 30, 2014			Nine months ended September 30, 2013(9)			Favorable (Unfavorable)
Owned communities:
Occupancy
Physical(1)	90.1		%	89.3		%	80 bps
Economic(2)	84.1		%	83.1		%	100 bps
NarPAB(3)	$	546		$	489		$	57
Other income per avail. bed(4)	$	44		$	44		$	—
RevPAB(5)	$	590		$	533		$	57
RevPOB(11)	$	655		$	597		$	58
Operating expense per bed(6)	$	286		$	272		$	(14	)
Operating margin(7)	51.6		%	48.9		%	270 bps
Design Beds(8)	245,048			218,166			26,882
Occupied Beds(12)	220,757			194,735			26,022
Same-communities(10):
Occupancy
Physical(1)	90.0		%	89.9		%	10 bps
Economic(2)	84.8		%	83.3		%	150 bps
NarPAB(3)	$	524		$	509		$	15
Other income per avail. bed(4)	$	42		$	40		$	2
RevPAB(5)	$	566		$	549		$	17
RevPOB(11)	$	629		$	611		$	18
Operating expense per bed(6)	$	272		$	263		$	(9	)
Operating margin(7)	52.0		%	52.1		%	(10) bps
Design Beds(8)	172,485			172,485			—
Occupied Beds(12)	155,311			155,041			270

(1)Represents a weighted average of the month-end occupancies for the respective period.

(2)Represents the effective occupancy calculated by taking net apartment rent accounted for on a GAAP basis for the respective period divided by market rent for the respective period.

(3)Net apartment rent per available bed ("NarPAB") represents GAAP net apartment rent for the respective period divided by the sum of the design beds in the portfolio for each of the periods presented.

(4)Represents other GAAP-based income for the respective period divided by the sum of the design beds in the portfolio for each of the included months. Other income includes service/application fees, late fees, termination fees, parking fees, transfer fees, damage recovery, utility recovery and other miscellaneous fees.

(5)Revenue per available bed ("RevPAB") represents total revenue (net apartment rent plus other income) for the respective period divided by the sum of the design beds in the portfolio for each of the periods presented.

(6)Represents property-level operating expense excluding management fees, depreciation and amortization and ground/facility lease fees divided by the sum of the design beds for each of the periods presented.

(7)Represents operating income divided by revenue.

(8)Represents the sum of the monthly design beds in the portfolio during the period. Design beds are total beds (including staff and model beds) in the portfolio.

(9)This information excludes property information related to discontinued operations.

(10)Represents operating statistics for communities that were owned by us and were operating for the full nine months ended September 30, 2014 and 2013. The same community portfolio excludes properties that are sold or have met the held for sale accounting treatment. In addition, the collegiate housing community referred to as 3949 at Saint Louis University is excluded from our same-community portfolio as it was damaged by fire on July 17, 2012. The community was insured and reopened in August 2013.

(11)Revenue per occupied bed ("RevPOB") represents total revenue (net apartment rent plus other income) for the respective period divided by the sum of the occupied beds for each of the periods presented.

(12)Represents the sum of the monthly occupied beds in the portfolio during the period.

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Total revenue in the collegiate housing leasing segment was $144.7 million for the nine months ended September 30, 2014. This represents an increase of $28.3 million, or 24.4%, from the same period in 2013. This increase included $29.9 million of revenue related to 18 new communities, which increased the portfolio to more than 29,000 beds, and $2.9 million of revenue from a 3.0% increase in same-community revenue. The growth in revenue for the 2013-2014 lease term included 2.5% increase in rental rates, a 0.2% improvement in occupancy and a 0.2% growth in other income. Consistent with company policy, at the beginning of each calendar year, the same-community portfolio mix changes when all properties owned and managed by us for the entire previous calendar year are moved into the same-community portfolio.

Operating expenses in the collegiate housing leasing segment increased $10.6 million, or 17.9%, to $70.1 million for the nine months ended September 30, 2014 as compared to the same period in 2013. The 18 new communities added $12.0 million of operating expenses over the same period in the prior year. In addition, same-community operating expenses increased $1.5 million, or 3.3%, over the same period in the prior year, mainly due to a $0.4 million increase in utility costs from extreme weather across the country during the first part of 2014 and an expected rise in real estate taxes of $1.0 million. In total, all other operating expenses for the same-community portfolio were essentially flat for the nine months ended September 30, 2014.

Development consulting services

The following table represents the development consulting projects that were active during the nine months ended September 30, 2014 and 2013:

			Segment Revenues
Project	Beds	Fee Type	2014		2013		Difference
			(in thousands)
West Chester University of Pennsylvania – Phase II	653	Development fee	$	442	$	577	$	(135	)
Mansfield University of Pennsylvania – Phase II	684	Development fee	3		1,224		(1,221		)
Wichita State University	784	Development fee	1,736		121		1,615
Clarion University	728	Development fee	470		—		470
Purchasing fees	—	Purchasing fee	30		—		30
Miscellaneous consulting fees	—	Consulting fee	2		67		(65		)
Third-party development consulting services total			$	2,683	$	1,989	$	694
Participating project – Science + Technology Park at Johns Hopkins	572	Development fee	2,581		—		2,581
Development consulting services total			$	5,264	$	1,989	$	3,275

Third-party development consulting services revenue increased $0.7 million to $2.7 million for the nine months ended September 30, 2014 as compared to the same period in 2013. We recognized development fees and cost savings on Wichita State University of approximately $1.0 million and $0.6 million, respectively, and development fees on Clarion University of $0.5 million during the nine months ended September 30, 2014. These fees were offset by a decrease in development fees recognized on West Chester University of Pennsylvania – Phase II of $0.1 million and Mansfield University of Pennsylvania – Phase II of $1.2 million.

Development consulting services on the participating project at Johns Hopkins increased $2.6 million related to the deferred fees recognized during the nine months ended September 30, 2014. These fees were collected in prior years but were deferred for GAAP purposes due to our participation in the project. The third-party owner successfully closed on permanent financing for the community in July 2014 and repaid their construction loan as well as the $18.0 million mezzanine investment that EROP advanced to the project. As a result of the refinancing, all previously deferred fees were recognized (see Note 2 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K).

General and administrative expenses for the segment increased $0.5 million, or 37.7%, for the nine months ended September 30, 2014 compared to the same period in 2013. This increase is primarily attributable to the increase in active development projects.

Management services

Total management services revenue increased $0.1 million, or 5.4%, for the nine months ended September 30, 2014 when compared to the same period in 2013 due primarily to the performance of our existing management portfolio.

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General and administrative expenses for the segment remained flat for the nine months ended September 30, 2014 when compared to the same period in 2013.

Other unallocated general and administrative expenses

Other unallocated general and administrative expenses increased $3.0 million, or 39.4%, during the nine months ended September 30, 2014 as compared to the same period in the prior year. The increase includes approximately $1.4 million in acquisition, development pursuit and severance costs, with the remainder related primarily to payroll costs related to the growth in our business and continued asset repositioning efforts.

Depreciation and amortization

Depreciation and amortization increased $9.4 million, or 28.0%, during the nine months ended September 30, 2014 as compared to the same period in the prior year. This increase relates primarily to the 18 new properties (acquisitions and developments) opened since January 1, 2013, as discussed above.

Ground lease expense

Ground lease expense increased $0.5 million, or 9.4%, during the nine months ended September 30, 2014 as compared to the same period in the prior year. This increase relates primarily to the opening of five developments on the campus of the University of Kentucky in 2013 and 2014. We recognize ground lease expense on a straight-line basis over the life of the lease.

Loss on impairment of collegiate housing properties

During the nine months ended September 30, 2014, we recorded impairment losses of $12.7 million, related to collegiate housing communities. The assets were determined to be impaired due to a change in circumstances that indicated their carrying values may not be recoverable (see Note 2 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). The changes in circumstances for the properties could be attributable to changes in property specific market conditions, changes in anticipated future use and/or leasing results or a combination of these factors.

Nonoperating (income) expenses

Nonoperating expenses decreased $13.6 million to income of $0.3 million for the nine months ended September 30, 2014. Contributing to the decrease was interest income and a guarantee fee related to the participating project at Johns Hopkins of $6.5 million and $3.0 million, respectively, recognized during the nine months ended September 30, 2014. In addition, during the nine months ended September 30, 2014, we settled all claims related to the insurance settlement on the 3949 Lindell property, which was damaged b fire in July 2012, and recognized a gain of $8.1 million (see Note 6 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). Offsetting these one-time nonoperating income items was an increase in interest expense of $2.6 million and a loss on extinguishment of debt of $0.9 million (see Note 4 to the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K).

Non GAAP Measures

Funds From Operations (FFO)

As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and impairment write-downs of depreciable real estate plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We present FFO available to all unitholders because we consider it to be 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. As such, we also exclude the impact of noncontrolling interests in our 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, 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,

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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, April 2002 and by the October 2011 guidance described above), 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. We believe that net income is the most directly comparable GAAP measure to FFO available to stockholders and unitholders. 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 make distributions.

EROP also uses core funds from operations, or Core FFO, as an operating performance measure. Core FFO is defined as FFO adjusted to include the economic impact of revenue on participating projects for which recognition is deferred for GAAP purposes. The adjustment for this revenue is calculated on the same percentage of completion method used to recognize revenue on third-party development projects. Core FFO also includes adjustments to exclude the impact of straight-line adjustments for ground leases, gains/losses on extinguishment of debt, transaction costs related to acquisitions and reorganization or severance costs. We believe that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of EROP’s assets. In addition, management uses Core FFO in the assessment of EROP’s operating performance and comparison to its industry peers and believes that Core FFO is a useful supplemental measure for the investing community to use in comparing EROP to other REITs as many REITs provide some form of adjusted or modified FFO.

The following table presents a reconciliation of FFO and Core FFO available to our unitholders to net income for the nine months ended September 30, 2014 and 2013 (amounts in thousands):

	Nine Months Ended September 30,
	2014			2013
Net income attributable to unitholders	$	24,658		$	2,679
Gain on sale of collegiate housing properties	(19,322		)	(3,895		)
Gain on insurance settlement	(8,133		)	—
Loss on impairment of collegiate housing properties	12,734			—
Real estate related depreciation and amortization	42,365			34,580
Real estate depreciation and amortization on equity investees	144			144
Noncontrolling interests	250			(2		)
FFO available to unitholders	52,696			33,506
Other adjustments to FFO:
Loss on extinguishment of debt	892			—
Acquisition costs	1,058			280
Severance costs, net of tax	314			—
Straight-line adjustment for ground leases	3,634			4,024
Impact of other adjustments to FFO	5,898			4,304
FFO on Participating Developments:
Interest on loan to Participating Development	(5,581		)	1,365
Development fees on Participating Development, net of costs and taxes	(1,548		)	454
FFO on Participating Developments:	(7,129		)	1,819
Core FFO available to unitholders	$	51,465		$	39,629

Net Operating Income (NOI)

We believe NOI is a useful measure of our collegiate housing operating performance. We define NOI as rental and other community-level revenues earned from our collegiate housing communities less community-level operating expenses, excluding management fees, depreciation, amortization, ground lease expense and impairment charges and including regional

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and other corporate costs of supporting the communities. Other REITs may use different methodologies for calculating NOI, and accordingly, EROP's NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. EROP uses NOI to evaluate performance on a community-by-community basis because it allows management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on EROP’s operating results. However, NOI should only be used as an alternative measure of EROP's financial performance.

The following is a reconciliation of our GAAP operating income to NOI for the nine months ended September 30, 2014 and 2013 (in thousands):

	Nine Months Ended September 30,
	2014		2013
Operating income	$	6,427	$	11,511
Less: Third-party development services revenue	5,264		1,989
Less: Third-party management services revenue	2,856		2,710
Plus: Development and management services expenses	6,964		5,224
Plus: General and administrative expenses	7,520		5,693
Plus: Ground leases	6,162		5,631
Plus: Impairment loss on collegiate housing properties	12,734		—
Plus: Depreciation and amortization	42,928		33,548
NOI	$	74,615	$	56,908

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)

Adjusted EBITDA is defined as net income or loss excluding: (1) straight line adjustment for ground leases; (2) acquisition costs; (3) depreciation and amortization; (4) loss on impairment of collegiate housing properties; (5) gain on sale of collegiate housing properties; (6) interest expense; (7) other nonoperating expense (income); (8) income tax expense (benefit); (9) non-controlling interest; and (10) applicable expenses related to discontinued operations. We consider Adjusted EBITDA useful to an investor in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results.

The following is a reconciliation of our GAAP net income to Adjusted EBITDA for the trailing twelve months ended September 30, 2014 (in thousands):

	Nine Months Ended September 30,			Plus: Year Ended December 31,			Less: Nine Months Ended September 30,			Trailing Twelve Months ended September 30,
	2014			2013			2013			2014
Net income attributable to unitholders	$	24,658		$	4,323		$	2,679		$	26,302
Straight line adjustment for ground leases	3,634			5,255			4,024			4,865
Acquisition costs	1,058			393			280			1,171
Depreciation and amortization	42,928			48,098			33,548			57,478
Depreciation and amortization - discontinued operations	—			1,767			1,414			353
Loss on impairment of collegiate housing properties	12,734			5,001			—			17,735
Gain on sale of collegiate housing properties	(19,322		)	(3,913		)	(3,895		)	(19,340		)
Gain on insurance settlement	(8,133		)	—			—			(8,133		)
Interest expense	15,076			17,526			12,478			20,124
Amortization of deferred financing costs	1,533			1,758			1,268			2,023
Interest income	(6,638		)	(447		)	(372		)	(6,713		)
Loss on extinguishment of debt	892			—			—			892
Income tax expense (benefit)	598			203			(269		)	1,070
Noncontrolling interests	393			308			6			695
Adjusted EBITDA	$	69,411		$	80,272		$	51,161		$	98,522

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Debt to gross assets

Debt to gross assets is defined as total debt, excluding the unamortized debt premium, divided by gross assets, or total assets excluding accumulated depreciation on real estate assets. We consider debt to gross assets useful to an investor in evaluating our leverage and in assessing our capital structure, because it excludes noncash items such as accumulated depreciation and provides a more accurate depiction of our capital structure.

The following is a reconciliation of our GAAP total assets to gross assets as of September 30, 2014 and December 31, 2013 (in thousands):

	As of September 30,			As of December 31,
	2014			2013
Mortgage and construction loans, net of unamortized premium	$	336,114		$	422,681
Unamortized premium	1,694			2,291
Mortgage and construction loans	334,420			420,390
Unsecured revolving credit facility	210,000			356,900
Unsecured term loan facility	187,500			—
Total debt	$	731,920		$	777,290
Total assets	$	1,812,904		$	1,610,565
Accumulated depreciation(1)	220,695			204,181
Gross assets	$	2,033,599		$	1,814,746
Debt to gross assets	36.0		%	42.8		%
(1) Represents accumulated depreciation on real estate assets.

Liquidity and Capital Resources

Fourth Amended Revolver

On January 14, 2013, EROP entered into a Fourth Amended and Restated Credit Agreement and, on October 24, 2013, entered into the First Amendment to the agreement which increased the maximum facility from $375.0 million to $500.0 million (as amended, the "Fourth Amended Revolver"). The Fourth Amended Revolver also has an accordion feature to $700.0 million, which may be exercised during the first four years subject to satisfaction of certain conditions. The initial maturity date of the Fourth Amended Revolver is January 14, 2018, EROP may extend the maturity date for one year subject to certain conditions.

Availability under the Fourth Amended Revolver is limited to a “borrowing base availability” equal to the lesser of (i) 60% of the property asset value (as defined in the credit agreement) and (ii) the loan amount, which would produce a debt service coverage ratio of no less than 1.40. As of September 30, 2014, the borrowing base availability was $500.0 million, and EROP had $210.0 million outstanding under the Fourth Amended Revolver; thus, the remaining borrowing base availability was $290.0 million.

The Trust serves as the guarantor for any funds borrowed by EROP under the Fourth Amended Revolver. The interest rate per annum applicable to the Fourth Amended Revolver is, at the Operating Partnership’s option, equal to a base rate or the London InterBank Offered Rate (“LIBOR”) plus an applicable margin based upon our leverage. As of September 30, 2014, the effective interest rate applicable to the Fourth Amended Revolver was 1.46%. If amounts are outstanding, due to the fact that the Fourth Amended Revolver bears interest at variable rates, cost approximates the fair value.

The Fourth Amended Revolver contains customary affirmative and negative covenants and contains financial covenants that, among other things, require EROP and its subsidiaries to maintain certain minimum ratios of EBITDA (earnings before payment or charges of interest, taxes, depreciation, amortization or extraordinary items) as compared to interest expense and total fixed charges. The financial covenants also include consolidated net worth and leverage ratio tests. In addition, the Trust is

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prohibited from making distributions in excess of 95% of funds from operations except to comply with the legal requirements to maintain its status as a REIT. As of September 30, 2014, we were in compliance with all covenants of the Fourth Amended Revolver.

Unsecured term loan facility

On January 13, 2014, EROP and certain of its subsidiaries (the “Borrowers”), each of which is an indirectly owned subsidiary of EROP, entered into a credit agreement (the "Credit Agreement"), which provides for unsecured term loans in the initial aggregate principal amount of $187.5 million, consisting of a $122.5 million Tranche A term loan with a seven-year maturity (the “Tranche A Term Loan”) and a $65.0 million Tranche B term loan with a five-year maturity (the “Tranche B Term Loan” and, together with the Tranche A Term Loan, the “Term Loans”). The Tranche A Term Loan matures on January 13, 2021 and the Tranche B Term Loan matures on January 13, 2019. The Credit Agreement contains an accordion feature pursuant to which the Borrowers may request that the total aggregate amount of the Term Loans be increased to $250.0 million, which may be allocated to Tranche A or Tranche B, subject to certain conditions, including obtaining commitments from any one or more lenders to provide such additional commitments. EROP used proceeds from the Term Loan to repay a portion of the outstanding balance under the Fourth Amended Revolver.

The interest rate per annum on the Tranche A Term Loan is, at the Borrowers’ option, equal to a base rate or LIBOR plus an applicable margin ranging from 155 to 225 basis points. The interest rate per annum on the Tranche B Term Loan is, at the Borrowers’ option, equal to a base rate or LIBOR plus an applicable margin ranging from 120 to 190 basis points. The applicable margin for the Term Loans is based on leverage.

The Credit Agreement contains customary affirmative and restrictive covenants substantially similar to those contained in EROP’s Fourth Amended Revolver. The Trust serves as the guarantor for any funds borrowed by the Borrowers under the Credit Agreement. As of September 30, 2014, we were in compliance with all covenants of the Credit Agreement.

In connection with entering into the Credit Agreement, EROP entered into multiple interest rate swaps with notional amounts totaling $187.5 million to hedge the interest payments on the LIBOR-based Term Loans (see Note 10 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). As of September 30, 2014, the effective interest rate on the Tranche A Term Loan was 3.85% (weighted average swap rate of 2.30% plus the current margin of 1.55%) and the effective interest rate on the Tranche B Term Loan was 2.86% (weighted average swap rate of 1.66% plus the current margin of 1.20%).

Mortgage and construction debt

Master Secured Credit Facility

EROP has a credit facility with Fannie Mae (the "Master Secured Credit Facility") that was entered into on December 31, 2008 and expanded on December 2, 2009. All notes under the Master Secured Credit Facility contain cross-default provisions, and all properties securing the notes are cross-collateralized. We were in compliance with all financial covenants, including consolidated net worth and liquidity tests, contained in the Master Secured Credit Facility as of September 30, 2014. As of September 30, 2014 and December 31, 2013, we had $160.4 million and $169.7 million, respectively, of mortgage loans outstanding under the Master Secured Credit Facility bearing interest at a weighted average fixed interest rate of 5.91%.

Mortgage debt

As of September 30, 2014, EROP had outstanding mortgage indebtedness of $81.1 million (excluding an unamortized debt premium of $1.7 million). Of the total mortgage debt outstanding at September 30, 2014, $47.1 million relates to mortgage debt bearing interest at fixed rates ranging from 4.2% to 5.6% and $34.0 million relates to mortgage debt bearing interest at variable rates at a weighted average effective interest rate of 2.29%. The mortgage debt outstanding is secured by underlying collegiate housing properties.

In February 2014, EROP repaid in full variable rate mortgage debt of $35.7 million that was assumed in connection with the 2011 acquisition of the GrandMarc at Westberry Place collegiate housing community located at Texas Christian University. The interest rate was equal to a base rate plus a 4.85% margin, and the loan was scheduled to mature on January 1, 2020. In connection with this repayment, we recognized a $0.6 million loss on extinguishment of debt.

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On July 1, 2014, in connection with the sale of Pointe West collegiate housing community located at University of South Carolina, EROP repaid a mortgage debt of $9.5 million in full. The interest rate was equal to 4.92% and the mortgage debt was scheduled to mature on August 1, 2014.

On July 14, 2014, EROP repaid $7.2 million of mortgage debt that was part of the Master Secured Credit Facility. The interest rate was 4.96% and the mortgage debt was scheduled to mature on January 1, 2015. Simultaneously with the sale of The Reserve on South College, the community was released from the Master Secured Credit Facility (see Note 8 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). In connection with this pay off, we recognized a $0.1 million loss on extinguishment of debt.

Construction loans

As of September 30, 2014, EROP had construction loans outstanding of $60.5 million related to the following collegiate housing developments: The Retreat serving the University of Mississippi and Roosevelt Point serving Arizona State University - Downtown Phoenix Campus. Interest on these construction loans is at variable rates at a weighted average effective interest rate of 2.22%.

In April 2014, EROP repaid in full variable rate construction debt with an outstanding principal balance of $32.3 million related to the development of The Oaks on the Square (Phase I and II). The effective interest rate was equal to 2.41% and the loan was scheduled to mature on October 30, 2015.

On September 30, 2014, EROP repaid in full variable rate construction debt with an outstanding balance of $8.2 million related to the development of The Oaks on the Square (Phase III) serving the University of Connecticut. The effective interest rate was equal to 2.10% and the loan was scheduled to mature on September 11, 2017. In connection with this pay off, we recognized a $0.1 million loss on extinguishment of debt.

On July 9, 2014, EROP entered into a construction loan agreement related to the development of a jointly owned cottage-style community located in Louisville, Kentucky (The Retreat at Louisville). EROP is the majority owner and will manage the community once it is completed. The interest rate per year applicable to the loan is, at our option, equal to a base rate plus a 1.05% margin or LIBOR plus a 2.05% margin and is interest only through July 10, 2017. On July 10, 2017, if certain conditions are met, we have the option to extend the loan until July 9, 2018 and another year thereafter. During the extension periods, if applicable, principal and interest are to be repaid on a monthly basis. As of September 30, 2014, there were no amounts outstanding under the construction loan.

In connection with the acquisition of The Varsity serving the University of Michigan during the year ended December 31, 2013, EROP assumed a construction loan in the amount of $32.4 million. The interest rate per year applicable to the loan is equal to LIBOR plus a 2.25% margin and is interest only through August 1, 2015. As of September 30, 2014, the effective interest rate applicable to the loan was 2.40%. On August 1, 2015, if certain conditions for extension are met, we have the option to extend the loan until August 1, 2017. During the extension period, if applicable, principal and interest are to be repaid on a monthly basis.

See Note 12 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K, for subsequent events related to the new construction loan entered into for the development of the fourth phase of The Oaks on the Square project.

Liquidity outlook and capital requirements

During the nine months ended September 30, 2014, we generated $71.3 million of cash from operations, received $271.5 million in proceeds from issuances of units to the Trust in connection with the Trust's follow on offering in June 2014 and stock issued under the ATM program, received proceeds of $187.5 million from the new unsecured term loan facility, received proceeds of $69.0 million related to the sale of three collegiate housing communities, and borrowed $9.8 million under mortgage and construction loans. When combined with $22.1 million of existing cash, during the nine months ended September 30, 2014, we were able to repay $146.9 million on the Fourth Amended Revolver, invest $14.7 million of capital into existing communities, acquire two collegiate housing properties for $132.2 million, invest $8.3 million in joint ventures, repay $95.7 million of mortgage and construction debt, invest $177.8 million in assets under development and distribute $42.1 million to our unitholders in order to end the quarter with approximately $18.4 million in cash.

Our short-term liquidity needs include funds for distributions to our unitholders, including those required to maintain our REIT status and satisfy our current annual distribution target of $0.46 per share/unit, funds for capital expenditures, funds for debt

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repayment and, potentially, funds for new property acquisition and development. We generally expect to meet our short-term liquidity requirements through cash provided by operations, debt refinancing, existing cash and recycling capital through potential asset sales. We believe that these sources of capital will be sufficient to provide for our short-term capital needs. We have managed our balance sheet so that all capital needs, including announced and committed development deals, are pre-funded by our balance sheet capacity. In June 2014, the Trust completed a follow-on equity offering selling 24.5 million shares of common stock for net proceeds of $239.4 million, which were used to repay a portion of our Fourth Amended Revolver. The offering provided additional balance sheet capacity to fund two additional 2015 developments and purchase The District on Apache adjacent to Arizona State University for $90 million in September 2014, as well as improving our leverage metrics. We will continue to monitor the equity markets and in the future anticipate accessing capital through our At-the-Market equity offering program or additional follow on offerings.

Distributions for the nine months ended September 30, 2014 totaled $42.9 million, or $0.34, per weighted average unit, compared to cash provided by operations of $71.3 million, or $0.57, per weighted average unit. This includes one quarterly dividend at the newly Board-approved targeted dividend of $0.12 per share compared to the previous dividend of $0.11 per share.

Based on the Trust's closing share price of $10.28 on September 30, 2014, our total enterprise value was $2.2 billion. With net debt (total debt less cash) of $713.5 million as of September 30, 2014, our debt to enterprise value was 32.6% compared to 42.5% as of December 31, 2013. With gross assets of $2.0 billion, which excludes accumulated depreciation of $220.7 million, our debt to gross assets ratio was 36.0% as of September 30, 2014 as compared to 42.8% as of December 31, 2013.

On May 22, 2012, the Trust entered into two equity distribution agreements ("ATM Program") pursuant to which the Trust may issue and sell shares of its common stock having an aggregate offering amount of $50.0 million. As of December 31, 2013, the Trust had sold 1.6 million shares of common stock under the distribution agreements for net proceeds of approximately $17.8 million. The Trust contributed the proceeds to EROP and EROP used the net proceeds to repay debt, fund the development pipeline, fund acquisitions and for general corporate purposes. The Trust also sold all remaining shares under the distribution agreements during the nine months ended September 30, 2014 and received net proceeds of $31.5 million. Subsequent to the end of the quarter the Trust entered into agreements to establish a new ATM Program authorized to sell a maximum of $150.0 million in additional shares of stock.

Acquisition, disposition and development activity

An additional source of capital, subject to appropriate market conditions, is the targeted disposition of non-strategic communities. We continually assess all of our communities, the markets in which they are located and the universities they serve, to determine if any dispositions are necessary or appropriate. The net proceeds from the sale of any asset would provide additional capital that would most likely be used to pay down debt and possibly finance acquisition/development growth or other operational needs.

During the nine months ended September 30, 2014, we completed the sale of The Reserve on West 31st, located in Lawrence, Kansas, College Station at West Lafayette, located in West Lafayette, Indiana, Pointe West, located in Cayce, South Carolina and The Reserve on South College, located in Auburn, Alabama for a combined sales price of $71.7 million. and received proceeds of $52.2 million after repayment of $16.7 million of mortgage debt, with an average interest rate of 4.9%. The remaining net proceeds were used to pay down the outstanding balance on our unsecured revolving credit facility.

We intend to invest in additional communities only as suitable opportunities arise. We also plan to develop communities for our ownership and management. In the short term, we intend to fund any developments or acquisitions with working capital, borrowings under our Fourth Amended Revolver, constructions loans, asset sales, or borrowings under first mortgage secured debt. We intend to finance property acquisitions and development projects over the longer term with cash from operations, the proceeds from potential asset sales, private capital in the form of joint ventures, debt financing and issuances of units in EROP. There can be no assurance, however, that such funding will be obtained on reasonable terms, or at all, particularly in light of current capital market conditions.

We previously entered into a presale agreement to purchase 109 Tower adjacent to Florida International University, in Miami, FL. The $43.5 million acquisition was subject to completion of the project in time for fall 2014 occupancy and we assumed lease-up risk during construction. The transaction closed in August 2014 upon successful completion and delivery of the community.

We have five active owned development projects with our aggregate share of development costs of $291.6 million. As of September 30, 2014, $199.0 million of the development costs remain to be funded.

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Predevelopment expenditures

Our third-party development consulting activities have historically required us to fund predevelopment 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 loss related to these predevelopment expenditures, if financing cannot ultimately be arranged on acceptable terms. However, we typically obtain a guarantee of repayment of these predevelopment expenditures from the project owner, but no assurance can be given that we would be successful in collecting the amount guaranteed in the event that project financing is not obtained. When we develop projects for ownership, as opposed to our third-party development services, EROP bears all exposure to risks and capital requirements for these developments.

Long-term liquidity requirements

Our long-term liquidity requirements consist primarily of funds necessary for scheduled debt maturities, acquisitions, developments, renovations and other non-recurring capital expenditures that are needed periodically for our communities. We expect to meet these needs through existing working capital, cash provided by operations, additional borrowings under our Fourth Amended Revolver, net proceeds from potential asset sales, the issuance of equity securities by the Trust, including common or preferred stock of the Trust, units in EROP or additional debt, if market conditions permit. In January 2014, we entered into a $187.5 million unsecured term loan with five- and seven-year tranches (the "Unsecured Term Loan") (see Note 4 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K). At the same time, we entered into interest rate swap agreements to effectively fix the interest rate. We believe these sources of capital will be sufficient to provide for our long-term capital needs. Market conditions, however, may make additional capital more expensive for us. There can be no assurance that we will be able to obtain additional financing under satisfactory conditions, or at all, or that we will make any investments in additional communities. Our Fourth Amended Revolver is a material source to satisfy our long-term liquidity requirements. As such, compliance with the financial and operating debt covenants is material to our liquidity. As of September 30, 2014, we were in compliance with all covenants related to our Fourth Amended Revolver.

Commitments

For the nine months ended September 30, 2014, our commitments, contingencies and contractual obligations were not materially different from the amounts reported for the year ended December 31, 2013, except for the net decrease in debt of $46 million (see Note 4 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K) and our contractual interest obligations on our mortgage and construction debt have increased approximately $18 million related to interest on the term loan facility entered into during January 2014 (see Note 4 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K).

Long-term indebtedness

As of September 30, 2014, 34 of our communities were unencumbered by mortgage debt. As of September 30, 2014, we had outstanding mortgage and construction indebtedness of $336.1 million (net of unamortized debt premium of $1.7 million). The scheduled future maturities of this indebtedness as of September 30, 2014 were as follows (in thousands):

Year Ending December 31,
2014 (3 months as of December 31, 2014)	$	896
2015	96,983
2016	124,672
2017	39,068
2018	1,635
Thereafter	71,166
Total	334,420
Debt premium	1,694
Outstanding as of September 30, 2014, net of debt premium	$	336,114

As of September 30, 2014, the outstanding mortgage and construction debt had a weighted average effective interest rate of 4.39% and carried an average term to maturity of 2.04 years.

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EROP had $210.0 million outstanding under the Fourth Amended Revolver as of September 30, 2014. The Fourth Amended Revolver matures on January 14, 2018, with a one-year extension option, subject to certain conditions. The Fourth Amended Revolver requires interest only payments through maturity. The interest rate per annum applicable to the Fourth Amended Revolver is, at our option, equal to a base rate or LIBOR plus an applicable margin based upon our leverage. The interest rate applicable to the Fourth Amended Revolver as of September 30, 2014 was 1.46%.

Distributions

The Trust is required to distribute 90% of its REIT taxable income (excluding the deduction for dividends paid and net 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 unitholders. These distributions are determined quarterly by the general partner and are generally equal to the dividend per share of the Trust’s common stock, determined quarterly by the Board. During July of 2013, the Trust's Board increased the annual dividend target by 10% from $0.40 to $0.44 per unit becoming effective with the August 15, 2013 dividend. During May of 2014, the Board increased the annual dividend target by 9% to $0.48 per share/unit becoming effective with the August 15, 2014 dividend.

A third quarter distribution of $0.12 per unit for the quarter ended September 30, 2014 will be paid on November 15, 2014 to unitholders of record at the close of business on October 31, 2014.

Off-Balance Sheet Arrangements

EROP serves as non-recourse, carve-out guarantor for secured third-party debt in the amount of $23.7 million, held by one unconsolidated joint venture. The loan is scheduled to mature on July 1, 2020. EROP is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates. Therefore, exposure under the guarantee for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates is not expected to exceed EROP's proportionate interest in the related mortgage debt of $5.9 million.

EROP, along with a joint venture partner, have jointly and severally guaranteed partial repayment for secured third-party construction debt held by one unconsolidated joint venture under development. The maturity date of the construction loan is December 31, 2015, with an option to extend the maturity date to December 31, 2016, provided certain conditions for extension are met. On December 31, 2016, the joint venture has the ability to further extend the maturity date to December 31, 2017, provided certain conditions for extension are met. The partial repayment guaranty for the construction debt is limited to $8.8 million. In addition, EROP serves as a non-recourse, carve-out guarantor for the secured third-party debt and is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates. Therefore, exposure under the guaranties for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates are not expected to exceed EROP's proportionate interest in the related mortgage debt in the case of the non-recourse, carve-out guaranty, or EROP's proportionate interest in the partial repayment guaranty of $8.8 million. As of September 30, 2014 and December 31, 2013, the joint venture had $50.8 million and $13.1 million outstanding, respectively, on the construction loans.

EROP, along with a joint venture partner, have jointly and severally guaranteed partial repayment for secured third-party construction debt held by one unconsolidated joint venture under development. The maturity date of the construction loan is May 2, 2017, with an option to extend the maturity date to May 2, 2018, provided certain conditions for extension are met. On May 2, 2018, the joint venture has the ability to further extend the maturity date to May 2, 2019, provided certain conditions for extension are met. The partial repayment guaranty for the construction debt is limited to $7.2 million. In addition, EROP serves as a non-recourse, carve-out guarantor for the secured third-party debt and is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the joint venture's operating agreement, our joint venture partner agreed to indemnify, defend and hold harmless EROP with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates. Therefore,

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exposure under the guaranties for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of EROP or its employees, agents or affiliates are not expected to exceed EROP's proportionate interest in the related mortgage debt in the case of the non-recourse, carve-out guaranty, or EROP's proportionate interest in the partial repayment guaranty of $7.2 million. As of September 30, 2014, the joint venture had not drawn on the construction loan.

In connection with the development agreement entered into on July 14, 2010 for a project at the Science + Technology Park at Johns Hopkins Medical Institute (see Note 2 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K), EROP has committed to provide a guarantee of repayment of a $42.0 million third-party construction loan for a $3.0 million fee, of which the carrying value approximates fair value. On July 1, 2014, the third-party owners refinanced the construction loan and EROP was released from the guarantee obligations. EROP also collected and recognized the $3.0 million guarantee fee during the three months ending September 30, 2014.

In connection with the condominium agreement related to The Oaks on the Square project in Storrs, Connecticut (see Note 4 of the accompanying condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K) EROP and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment of a $46.4 million construction loan to develop the residential and retail portions of the first two phases of the project. As of December 31, 2013, $43.2 million had been drawn on the construction loan of which $11.8 million was attributable to LeylandAlliance LLC; this amount is not included in our accompanying condensed consolidated financial statements. On April 1, 2014, the construction loan for the first two phases of the project was repaid in full and EROP was released from the guarantee obligations of the construction loan.

During August 2013, EROP and LeylandAlliance LLC entered into a $13.8 million construction loan for the third phase of the The Oaks on the Square project. Similar to the construction loan for the first and second phases, EROP and LeylandAlliance LLC have jointly committed to provide a guarantee of repayment for the construction loan. As of December 31, 2013, $1.3 million had been drawn on the construction loan, of which $1.0 million, is attributable to LeylandAlliance LLC; these amounts are not included in our accompanying condensed consolidated financial statements. On September 30, 2014, the construction loan for the third phase of the project was repaid in full and EROP was released from the guarantee obligations.

Inflation

Our collegiate housing leases typically do not have terms that extend beyond twelve 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, our ability to raise rental rates may be limited by a weak economic environment, increased competition from new collegiate housing in our primary markets and/or a reduction in student enrollment at our principal colleges and universities.

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