MEMPHIS, Tenn., May 8, 2006 (PRIMEZONE) -- Education Realty Trust, Inc. (NYSE:EDR), one of America's largest owners and operators of collegiate student housing, today reported financial results for the quarter ended March 31, 2006.
Among its highlights, Education Realty Trust reported:
-- Funds from operations (FFO) of $8.4 million or $0.30 per
dilutive share for the first quarter, a 12 percent increase over
FFO of $7.5 million, or $.26 per dilutive share, for the fourth
quarter 2005;
-- Quarterly revenues of $30.0 million, an 8 percent increase over
revenues of $27.9 million in the fourth quarter of 2005;
-- Average occupancy of 95 percent for the quarter ended March 31,
2006, up from 93 percent for the quarter ended March 31, 2005 and
even with the fourth quarter 2005;
-- Stronger pre-leasing for the 2006/2007 academic year, with 72
percent of all beds pre-leased compared to 68 percent at owned
communities and 65 percent at managed communities on May 1, 2005;
-- Average rental rates for the upcoming 2006/2007 academic year
approximately 4 percent higher than current leases;
-- Planned construction starts this month on three development
consulting projects, including a joint-venture development two
blocks from the University of North Carolina-Greensboro; and
-- Maintained a regular quarterly cash dividend at $.2975 per
share, in line with the company's target dividend of $1.19 per
share for 2006.
First Quarter 2006 Operating Results
Operating results in the accompanying financial tables combine the results of EDR's predecessor for the period January 1 through January 30, 2005 and EDR since its initial public offering (IPO) and acquisition of 21 collegiate communities on January 31, 2005 through March 31, 2005. These results are compared to operating results of EDR for the quarter ended March 31, 2006, which include the subsequent acquisition of 18 collegiate communities in 2005 and early 2006. Due to the substantial growth through acquisitions late in 2005 and early 2006 and other activity related to EDR's IPO, comparisons of operating results for the first quarter 2005 with those of the first quarter of 2006 are of limited value.
Revenues for the quarter ended March 31, 2006 were $30.0 million, an 8 percent increase over the $27.9 million of revenues for the quarter ended December 31, 2005. The increase was driven by $3.4 million of lease revenue related to the 13-property Place Properties portfolio purchase in January offset by $0.7 million decrease in operating expense reimbursements, $0.2 million drop in development revenue due to project timing, and an approximate $0.5 million drop in lease revenue.
Operating expenses excluding depreciation and amortization were $14.9 million for the first quarter of 2006, a 6 percent decrease from $15.8 million for the fourth quarter of 2005. The decrease resulted from a reduction in student leasing operations of $1.2 million and a $0.7 million decrease in reimbursable operating expenses offset by a $0.9 million increase in G&A expenses mostly related to Sarbanes Oxley and compensation expense increases. Depreciation increased $3.6 million to $9.2 million primarily as a result of the Place Properties acquisition in January 2006. Non-operating expenses were up $2.8 million over the fourth quarter 2005 to $6.9 million for the quarter ended March 31, 2006 due to interest expense increases from the January 2006 Place Properties acquisition.
Funds from operations (FFO) for the first quarter were $8.4 million, or $0.30 per dilutive share compared to $7.5 million, or $0.26 per dilutive share for the fourth quarter 2005, a 12 percent gain.
Weighted average dilutive shares outstanding for the first quarter 2006 and fourth quarter 2005 were approximately 28.2 million. A reconciliation of FFO to net income is included in the financial tables accompanying this press release. For a definition of FFO and a statement by management regarding the reasons for and significance of reporting FFO as a measure of performance, see Management's Discussion and Analysis of Financial Condition and Results of Operations in EDR's annual report on 10-K for the year ended December 31, 2005.
Paul O. Bower, chairman, president and chief executive officer of EDR stated: "We posted another solid quarter, marked by good FFO growth and controlled operating expenses. We are very pleased with the pre-leasing for the upcoming academic year, both in terms of the increase in beds pre-leased at this time compared with this time last year, but also in terms of the increase in rental rates. We have successfully integrated the Place Properties portfolio and are poised to use our operating leverage to drive FFO increases from that acquisition. We have added solid third party development projects during the quarter that provide us with financial upside in the operating earnings and potential appreciation from those projects while at the same time minimizing our cash investment. Overall, we believe we have achieved stability as a public company that will allow us to continue to meet earnings targets and fund our dividend at anticipated levels."
Occupancy and Leasing
Physical occupancy at all properties in the EDR portfolio of collegiate communities was 94.6 percent as of March 31, 2006, up from 92.6 percent for the comparable period in 2005. The physical occupancy rate represents a weighted average of the month-end occupancies for the three months ended March 31.
Economic occupancy at all properties in the EDR portfolio was 95.1 percent as of March 31, 2006, up from 92.3 percent for the comparable quarter in 2005. The economic occupancy rate is calculated by dividing net apartment rents for the quarter by market rent for the quarter ended March 31.
As of April 30, 2006, physical occupancy statistics show occupancy across the portfolio of EDR owned communities and EDR managed communities at 93.5 percent, up 4 percentage points from 89.8 percent as of April 30, 2005.
The following are additional details about EDR's occupancy at April 30, 2006:
-- At the seven EDR predecessor communities, occupancy was
91.2 percent at April 30, 2006, up from 89.2 percent on
April 30, 2005.
-- At the 14 communities acquired from JPI, occupancy was
94.5 percent at April 30, 2006, up from 93.3 percent on
April 30, 2005.
-- At the five communities acquired by EDR subsequent to its
IPO, occupancy was 94.8 percent at April 30, 2006, up from
88.8 percent on April 30, 2005.
-- At 13 communities in regional markets acquired from Place
Properties L.P. of Atlanta, occupancy was 94.7 percent at
April 30, 2006, up from 87.6 percent on April 30, 2005.
Physical occupancy at communities in the EDR managed portfolio was also higher. Occupancy was 91.8 percent at properties managed by Allen & O'Hara Education Services, Inc., the EDR property management subsidiary, as of April 30, 2006, up from 86.5 percent a year ago.
For the upcoming 2006-2007 academic year, as of May 1, 2006, the company has pre-leased approximately 72 percent of its beds, compared to approximately 68 percent pre-leased as of May 1, 2005. The following are additional details about pre-leasing activities for the upcoming academic year:
-- At EDR owned communities, 71.9 percent of the beds are pre-leased
for fall 2006 compared to 67.9 percent of the beds pre-leased a
year ago for the fall of 2005.
-- At EDR managed communities, 72.5 percent of available beds are
pre-leased for fall 2006 compared to 65.6 percent pre-leased a
year ago.
-- At 13 communities acquired from Place Properties in January,
62 percent of available beds are pre-leased for fall 2006
compared to 64 percent pre-leased a year ago.
Acquisition and Development Activity
In January 2006, EDR completed its previously announced purchase of 13 collegiate communities in six states for a contract price of $195 million from Place Properties LP of Atlanta.
EDR expects to continue evaluate high-quality, purpose-built collegiate student housing for possible investment during 2006. So far this year, the company has evaluated 29 properties for possible purchase.
In April 2006, EDR announced its participation in a joint venture development of a new 204-unit, 600-bed off-campus collegiate community at the University of North Carolina-Greensboro slated to open in 2007. In the joint venture, EDR's taxable REIT subsidiary will provide development and construction management services. EDR will guarantee certain construction debt, in exchange for an interest in the student housing community. EDR also recently announced its selection as co-developer of a 319-unit, 849-bed off-campus community planned to open in 2008 adjacent to the north campus at the University of Michigan in Ann Arbor.
In addition, EDR continues to provide development consulting services for student housing communities at six college campuses in the East, South and West through its development company subsidiary, Allen & O'Hara Development Company, LLC.
Six projects with 4,368 beds are in development or under construction. They include:
-- Slippery Rock University in Pennsylvania, where construction of
two buildings with 700 student beds is ahead of schedule for an
August 2006 opening and two more buildings with 690 student beds
are slated to open in late 2006 and summer of 2007. Design is
underway on Phase II buildings with 1,000 more student beds, and
construction is set to start in 2007.
-- California University of Pennsylvania, where construction of
447 beds of on-campus student housing continues toward on-time
completion in August 2006 and where construction of 352 beds is
scheduled to start in June 2006.
-- Indiana University of Pennsylvania, where a $51 million bond
issue is scheduled to close and construction is scheduled to
begin this month on the first of a multi-phase, $250 million
project to replace all on-campus student housing.
-- University of Alabama - Birmingham, where construction of a
190-unit, 753-bed Blazer Hall continues on time and on budget
toward an opening this month.
-- University of Colorado at Denver, where construction is ahead
of schedule on the 685-bed Campus Village Apartments adjacent to
the Auraria Higher Education Center, a shared campus with
Metropolitan State College and Community College of Denver.
-- University of Louisville, where construction is on schedule for
the fall 2006 opening of a 359-bed residential suites and Greek
organizations building.
Property Management Update
Allen & O'Hara Education Services Inc. is actively engaged in the initial leasing activities at soon-to-be-completed properties in Birmingham, Denver and Louisville. Blazer Hall at UAB in Birmingham is scheduled to open later this month and Campus Village in Denver and Community Park at the University of Louisville are slated to open in later this summer.
Supplemental Information
The company has scheduled a conference call for interested parties for Tuesday, May 9, 2006, with Chairman, CEO and President Paul Bower, Executive Vice President and CFO Randy Brown and Executive Vice President and Chief Investment Officer Craig Cardwell, who will discuss the company's results. The call is set to begin at 11 a.m. Eastern Time.
The conference call will be accessible by telephone and through the Internet. To access the call, participants from within the U.S. may dial 866.770.7146 and participants from outside the U.S. may dial 617.213.8068. The pass code for this call is 25143739. Participants who prefer may access the call via the Internet at www.educationrealty.com or www.earnings.com, or institutional investors may log on to www.streetevents.com prior to the call.
A taped rebroadcast of the earnings call will be available shortly after its completion on May 9 through May 16, 2006. To access the rebroadcast, the domestic number is 888.286.8010, the international number is 617.801.6888 and the pass code is 68802427. A replay of the call will also be available at www.educationrealty.com or www.earnings.com for 30 days following the call. The call will also be available for MP3 player download through www.reitcafe.com.
About Education Realty Trust
Education Realty Trust, Inc. (NYSE:EDR) is a real estate investment trust that owns, manages and develops high-quality collegiate student housing. Led by a team with more than 170 years of shared industry experience, EDR is one of America's largest owners and operators of collegiate student housing. Its portfolio includes 36,637 beds at 59 properties in 21 states. For more information please visit the company's Web site at www.educationrealty.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
Statements about the company's business that are not historical facts are "forward-looking statements." Forward-looking statements are based on current expectations. You should not rely on our forward-looking statements because the matters they describe are subject to known and unknown risks and uncertainties that could cause the company's future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such statements. Such risks are set forth under the captions "Item 1A. Risk Factors" and "Forward-Looking Statements" in our annual report on Form 10-K and under the caption "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" (or similar captions) in our quarterly reports on Form 10-Q, and as described in our other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and EDR undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
Consolidated Education
Realty Trust, Inc.
----------------------
March 31, December 31,
2006 2005
--------- ---------
Assets (Unaudited)
Student housing properties, net $ 814,145 $ 620,305
Corporate office furniture, net 933 991
Cash and cash equivalents 4,311 61,662
Restricted cash 10,004 6,738
Student contracts receivable, net 262 470
Receivable from affiliates 61 --
Management fee receivable from third party 272 552
Goodwill and other intangibles, net 3,400 3,546
Other assets 8,105 9,785
--------- ---------
Total assets $ 841,493 $ 704,049
========= =========
Liabilities and stockholder's equity
Liabilities
Mortgage loans, net of unamortized
premium/discount $ 426,472 $ 328,335
Long term debt 50,000 --
Accounts payable and accrued expenses 8,915 9,370
Accounts payable affiliates -- 225
Deferred revenue 6,079 7,660
--------- ---------
Total liabilities 491,466 345,590
--------- ---------
Minority interest 28,157 27,926
--------- ---------
Commitments and contingencies -- --
Stockholder's equity:
Common stock, $0.01 par value,
200,000,000 shares authorized,
26,272,889 and 26,263,889 shares issued
and outstanding as of March 31, 2006
and December 31, 2005, respectively 263 263
Preferred shares, $0.01 par value,
50,000,000 shares authorized, no
shares issues and outstanding -- --
Additional paid in capital 343,781 351,664
Loan to unitholder (5,996) (5,996)
Warrants 375 375
Accumulated deficit (16,553) (15,773)
--------- ---------
Total stockholder's equity 321,870 330,533
--------- ---------
Total liabilities and stockholder's equity $ 841,493 $ 704,049
========= =========
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES AND
EDUCATION REALTY TRUST PREDECESSOR CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(Amounts in thousands except share and per share data)
EDR EDR
EDR Predecessor Consolidated
Consolidated Combined & Combined
------------------ ---------- ----------
Three months Jan. 1 Three months
ended to ended
March 31, Jan. 30, March 31,
2006 2005 2005 2005
------------------ -------- --------
Revenues: (unaudited) (unaudited)
Student housing
leasing revenue $22,534 $12,088 $ 1,503 $ 13,591
Student housing food
service revenue 968 588 269 857
Other leasing revenue 3,434 -- -- --
Third-party development
services 555 9 -- 9
Third-party management
services 699 289 103 392
Operating expense
reimbursements 1,795 686 671 1,357
------- ------- -------- --------
Total revenues 29,985 13,660 2,546 16,206
------- ------- -------- --------
Operating expenses:
Student housing
leasing operations 9,289 4,903 524 5,427
Student housing food
service operations 859 520 255 775
General and
administrative 2,980 5,177 367 5,544
Depreciation and
amortization 9,153 5,759 260 6,019
Reimbursable operating
expenses 1,795 686 671 1,357
------- ------- -------- --------
Total operating
expenses 24,076 17,045 2,077 19,122
------- ------- -------- --------
Operating income (loss) 5,909 (3,385) 469 (2,916)
Nonoperating expenses:
Interest expense 6,870 2,577 479 3,056
Exit fees on early
repayment of mortgages -- 1,084 -- 1,084
Amortization of deferred
financing costs 274 116 -- 116
Interest income (209) (279) -- (279)
------- ------- -------- --------
Total nonoperating
expenses 6,935 3,498 479 3,977
------- ------- -------- --------
Loss before equity in
earnings of unconsolidated
entities, income taxes,
and minority
interest (1,026) (6,883) (10) (6,893)
Equity in earnings of
unconsolidated entities 283 71 27 98
------- ------- -------- --------
Income (loss) before
income taxes and
minority interest (743) (6,812) 17 (6,795)
Income tax benefit (104) (66) -- (66)
------- ------- -------- --------
Net income (loss)
before minority
interest (639) (6,746) 17 (6,729)
Minority Interest 141 (431) -- (431)
------- ------- -------- --------
Net income (loss) $ (780) $(6,315) $ 17 $ (6,298)
======= ======= ======== ========
Net loss per share
- basic & diluted $ (0.03) $ (0.29)
======= =======
Weighted-average common
shares outstanding
- Basic and diluted 26,268,389 21,853,599
========== ==========
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CALCULATION OF FFO AND FFOA
(Amounts in thousands, except share and per share data, Unaudited)
Three months ended January 1 to
March 31, January 30,
2006 2005 2005
---------------------- ---------------
(EDR Consolidated) (EDR Predecessor)
---------------------- ---------------
Net income (loss) $ (780) $(6,315) $ 17
Real estate related
depreciation and
amortization 9,069 5,702 260
Minority interest 141 (431) --
------- ------- -------
Funds from
operations ("FFO") 8,430 (1,044) 277
Elimination of one-time
IPO related transactions:
Charge for profit interest
units -- 4,039 --
Write-off of fees
associated with re-
payment of mortgage debt -- 1,084 --
Loss of deferred revenue
due to purchase
accounting (a) -- 411 --
------- ------- -------
Impact of IPO related
transactions -- 5,524 --
------- ------- -------
Funds from operations
- adjusted ("FFOA") $ 8,430 $ 4,490 $ 277
======= ======= =======
FFO per share - weighted
average dilutive
stocks/units $0.30 $ (0.04)
FFOA per share - weighted
average dilutive
stocks/units $0.30 $ 0.19
Weighted average
dilutive shares/units 28,203,007 23,962,182
FFO per share - dilutive
stocks/units $0.30 $ (0.04)
FFOA per share - dilutive
stocks/units $0.30 $ 0.19
Total potentially dilutive
common and restricted
stock and partnership
units 28,351,682 23,962,182
========== ==========
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(a) Represents the balance of deferred straight-lined rents and
service fees at the time of the Formation Transactions and IPO
that would have been recognized by the company during the
subsequently reported period had it already owned the properties.
Generally accepted accounting principles do not allow such
revenue items to be carried forward in an acquisition, resulting
in this one-time, non-recurring loss of revenue.