MEMPHIS, Tenn., March 10, 2006 (PRIMEZONE) -- Education Realty Trust, Inc. (NYSE:EDR), America's most experienced provider of collegiate student housing, today announced financial results for the quarter and year ended December 31, 2005.
Highlights
-- Fourth quarter earnings per share of $.08, compared to a net
loss of $.33 per share for the third quarter and $.80 per share
for the first eight months of operations as a public company.
-- Fourth quarter funds from operations (FFO) of $.26 per
potentially diluted share, compared to $.03 per share for third
quarter and $.20 for first eight months of operations as a public
company.
-- Maintained quarterly cash dividend at $.30 per share and affirmed
2006 target dividend of $1.19 per share.
-- Year end occupancy of 94 percent compared to 90 percent at
December 31, 2004.
-- Completed acquisition of 13 student housing communities with
5,894 beds in six states, increasing its total portfolio to 59
properties with 36,637 beds.
-- Pre-leased 47.3 percent of beds for 06/07 academic year as of
March 6, 2006 compared to 40.7 percent pre-leased at March 6,
2005 for 05/06 academic year.
-- Average rental rate on leases executed for the 06-07 academic
year approximately 4 percent higher, as of March 6, 2006, than
the average rental rate on 05/06 academic year leases.
Fourth Quarter and Year End Operating Results
Year end operating results discussed in this press release combine the operating results of EDR since closing of its initial public offering (IPO) and acquisition of its properties on January 31, 2005 and the operating results of its predecessor for the period January 1 through January 30, 2005. These results are compared to the operating results of EDR's predecessor for the year ended December 31, 2004, which do not include the operations of 14 student housing communities acquired from JPI Investment Company, L.P. at the time of the IPO and 5 student housing communities acquired since the IPO. Accordingly, comparisons of 2005 quarterly and annual operating results to 2004 periods are not meaningful.
Revenues for the fourth quarter were $27.9 million, a 17% increase over third quarter revenues. Operating expenses for the fourth quarter were $21.7 million, a $5 million, or approximately 19%, improvement over operating expenses of $26.7 million for the third quarter. Accordingly, operating income for the fourth quarter was $6.2 million compared to a $2.9 million operating loss for the third quarter, a $9.1 million quarter-to-quarter improvement in profitability. For the fourth quarter, net income was $2 million, or $.08 per share, compared to a net loss of $7.2 million, or $.33 per share for the third quarter.
Funds from operations (FFO) for the fourth quarter were $7.5 million, or $.26 per potentially dilutive share and operating partnership unit, compared to $975,000, or $.03 per potentially dilutive share and operating partnership unit for the third quarter, an 866% improvement. Potentially dilutive shares and operating partnership units outstanding for purposes of calculating FFO per share/unit for both the third and fourth quarters were approximately 28.3 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, 2004.
Paul O. Bower, chairman, chief executive officer and president of EDR, stated: "We believe that in the fourth quarter we turned the corner in our transition from private operators to a public company. Our revenue growth was strong, our expenses stabilized and we avoided the one-time charges from the prior quarters of operations."
"Moreover, our management team has refocused on the day-to-day business, generally free from the distractions of being a new public company and the time commitment that was required in landing the Place portfolio and raising the money to close the acquisition," said Bower. "We are seeing numerous opportunities for revenue growth, and we are confident that our 54 years of experience in the student housing business will allow us to capitalize on these opportunities in a way that increases shareholder value."
For the year ended December 31, 2005, revenues were $87.2 million and operating expenses were $87.7 million, resulting in a 2005 net loss from operations of $0.5 million. Net loss for the year ended December 31, 2005 was $15.5 million, or $.67 per share. Included in the annual net loss were one-time costs associated with the IPO of approximately $5.1 million.
For the year ended December 31, 2005, FFO were $13.1 million, or approximately $.46 per potentially dilutive share and operating partnership unit. FFO adjusted for one-time IPO charges were $19.5 million, or $.69 per potentially dilutive share and operating partnership unit.
Occupancy and Leasing
At quarter and year end, the properties comprising the EDR student housing portfolio had an occupancy rate of 94.3 percent, up from 90.3 percent at the same time a year ago.
Among the components of the EDR portfolio:
-- At the seven EDR predecessor properties, occupancy was 92.4
percent, up from 90.7 percent at December 31, 2004.
-- At the 14 properties acquired from JPI at the time of the IPO,
occupancy was 94.7 percent, up from 91.8 percent at December 31,
2004.
-- At the five properties acquired by EDR since the IPO, occupancy
was 95.4 percent, up from 84.8 percent at December 31, 2004.
Occupancy rates at properties EDR manages for third-party owners also jumped in 2005 over 2004. As of December 31, 2005, occupancy was 92.7 percent at properties managed by Allen & O'Hara Education Services, Inc., EDR's property management subsidiary, up from 84.7 percent a year ago.
As of March 6, 2006, the company reported the following leasing statistics for the upcoming 2006-2007 academic year:
-- Student beds at properties owned by EDR at year end are 47.3
percent pre-leased, up from 40.7 percent a year ago.
-- Student beds at properties managed by EDR's property management
company subsidiary, Allen & O'Hara Education Services, Inc., are
45.5 percent pre-leased, up from 36.7 percent a year ago.
-- Student beds at the 13 student housing communities acquired from
Place Properties in January are 44.2 percent pre-leased, up from
43.6 percent a year ago.
Development Activity
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.
Development projects at year end included:
-- 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-bed Phase
II is scheduled to start in June 2006.
-- Indiana University of Pennsylvania, where a $52.5 million bond
issue is scheduled to close and construction is scheduled to
begin May 1 on the first phase of a four-phase scope of work 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
a spring 2006 opening and where EDR's property management company
subsidiary, Allen & O'Hara Education Services Inc., will manage
the on-campus community.
-- 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.
Campus Village will open in the summer instead of the fall of
2006 and Allen & O'Hara Education Services Inc. will manage the
community.
-- University of Louisville, where construction is on schedule for
the fall 2006 opening of a 359-bed residential suites and Greek
organizations building. Allen & O'Hara Education Services Inc.
will manage the community.
Property Management Update
Allen & O'Hara Education Services Inc. is actively engaged in the initial leasing of properties in Birmingham, Denver and Louisville. Blazer Hall at UAB in Birmingham, Campus Village in Denver and Community Park at the University of Louisville are slated to open later this year. As of March 6, 2006, 32.3 percent of the available beds at the three properties are pre-leased for the 2006-2007 academic year.
Acquisition Activity
On January 6, 2006, EDR completed its previously announced purchase from Place Properties of 13 collegiate communities in six states for $195 million in cash, stock and assumed debt. The properties are expected to generate a conservatively estimated 7.2 percent return.
EDR evaluated potential acquisitions of purpose-built Class A student housing valued at about $2 billion during calendar 2005 and expects to evaluate a similar amount during 2006.
Supplemental Information and Quarterly Conference Call
A copy of this media release, a self-directed investor presentation and a supplemental packet of financial and operating information are available at the company's web site, www.educationrealty.com. EDR will host an earnings conference call for interested parties today Friday, March 10, 2006, beginning at 11 a.m. Eastern Time. During the call, EDR Chairman, CEO and President Paul O. Bower, Executive Vice President and CFO Randall H. Brown and Executive Vice President and Chief Investment Officer Craig L. Cardwell will review the company's 2005 results and discuss the business outlook for 2006.
To access the call, participants from within the U.S. may dial 866.700.6067 and participants from outside the U.S. may dial 617.213.8834. The pass code for this call is 28373289. Participants who prefer to listen to the call and view an accompanying slide presentation via the Internet may log on to 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 approximately one hour following its completion on March 10 through March 17, 2006. To access the rebroadcast, the domestic number is 888.286.8010, the international number is 617.801.6888 and the pass code is 38354987. 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 as a podcast on www.reitcafe.com.
About Education Realty Trust
Education Realty Trust is one of America's largest owners and operators of collegiate student housing, owning and/or managing approximately 36,637 beds at 59 properties near campuses around the country. For more information about EDR, please visit the company's Web site at www.educationrealty.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
Statements in this release regarding Education Realty Trust's business that are not historical facts are "forward-looking statements." Forward-looking statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause EDR's future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the "Business-Risk Factors" section of EDR's annual report on Form 10-K for the year ended December 31, 2004. 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
CONSOLIDATED AND COMBINED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
Dec. 31, 2005 Dec. 31, 2004
------------ --------------------------
Consolidated Consolidated Combined EDR
EDR EDR Predecessor
------------ ------------ ------------
(Unaudited)
Assets
Student housing
properties, net $ 620,305 $ -- $ 83,785
Corporate office
furniture, net 991 -- --
Cash and cash
equivalents 61,662 1 2,883
Restricted cash and
short-term investments 6,738 -- 1,102
Student contracts
receivable, net 470 -- 87
Management fee
receivable from third
party, net 552 -- 161
Goodwill and other
intangibles, net 3,214 -- --
Other assets 10,117 3,790 856
--------- --------- ---------
Total assets $ 704,049 $ 3,791 $ 88,874
========= ========= =========
Liabilities and
stockholders' and
predecessor owners'
equity
Liabilities:
Mortgage loans, net of
premium/discount $ 328,335 $ -- $ 81,111
Revolving line of credit -- 497 --
Note payable to
affiliate -- -- 485
Accounts payable and
accrued expenses 9,371 -- 1,642
Accounts payable
affiliate 225 3,515 799
Deferred revenue 7,660 -- 3,048
--------- --------- ---------
Total liabilities 345,591 4,012 87,085
Minority interest 27,926 -- --
Commitments and
contingencies
Stockholders' and
predecessor owners'
equity:
Common stock, $.01 par
value, 200,000,000
shares authorized,
26,263,889 shares
issued and outstanding
as of Dec. 31, 2005 263 -- --
Preferred shares, $0.01
par value, 50,000,000
shares authorized, no
shares issued and
outstanding -- -- --
Unearned deferred
compensation (2,470) -- --
Additional paid in
capital 354,134 1 --
Loan to unitholder (5,996) -- --
Warrants 375 -- --
Accumulated deficit (15,774) (222) --
Predecessor owners'
equity -- -- 1,789
--------- --------- ---------
Total stockholders' and
predecessor owners'
equity 330,532 (221) 1,789
--------- --------- ---------
Total liabilities and
stockholders' and
predecessor owners'
equity $ 704,049 $ 3,791 $ 88,874
========= ========= =========
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(Amounts in thousands except share and per share data)
EDR EDR
Consolidated Predecessor Combined
---------------------------------------
Three months ended Three months ended
Dec. 31, 2005 Dec. 31, 2004
------------------ ------------------
(Unaudited) (Unaudited)
Revenues:
Student housing leasing
revenue $ 23,045 $ 4,707
Student housing restaurant
revenue 888 897
Third-party development
services 786 4
Third-party management
services 710 370
Operating expense
reimbursements 2,485 1,365
------------ ------------
Total revenues 27,914 7,343
Operating Expenses:
Student housing leasing
operations 11,284 1,586
Student housing restaurant 826 800
General and administrative 1,549 825
Depreciation and
amortization 5,521 791
Reimbursable operating
expenses 2,485 1,365
------------ ------------
Total operating expenses 21,665 5,367
Operating income 6,249 1,976
Nonoperating Expenses:
Interest 4,298 1,408
Amortization of deferred
financing costs 238 41
Interest income (673) --
------------ ------------
Total nonoperating
expenses 3,863 1,449
Income before equity in
earnings of unconsolidated
entities, income taxes
and minority interest 2,386 527
Equity in earnings of
unconsolidated entities 293 69
------------ ------------
Income before income taxes
and minority interest 2,679 596
Income taxes 327 --
------------ ------------
Net income before minority
interest 2,352 596
Minority interest 344 --
------------ ------------
Net income $ 2,008 $ 596
============ ============
Earnings per share
information:
Net Income per share --
basic and diluted $ 0.08
============
Weighted average common
shares outstanding --
basic and diluted 26,259,639
============
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (contd.)
(Amounts in thousands except share and per share data)
EDR and EDR EDR
EDR Predecessor EDR Predecessor
Consolidated Combined Consolidated Combined
---------------------------------------- ------------
Jan. 31 to Jan. 1 to Year Ended Year Ended
Dec. 31, 2005 Jan. 30, 2005 Dec. 31, 2005 Dec. 31, 2004
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Student
housing
leasing
revenue $ 74,374 $ 1,503 $ 75,877 $ 17,896
Student housing
restaurant
revenue 3,222 269 3,491 3,137
Third-party
development
services 1,759 -- 1,759 392
Third-party
management
services 1,865 103 1,968 1,326
Operating
expense
reimbursements 6,023 671 6,694 5,223
------------ ------------ ------------ ------------
Total
revenues 87,243 2,546 89,789 27,974
Operating
Expenses:
Student
housing
leasing
operations 40,196 524 40,720 7,645
Student
housing
restaurant 3,020 255 3,275 2,899
General and
administrative 9,547 377 9,924 3,545
Depreciation
and
amortization 28,908 260 29,168 3,120
Reimbursable
operating
expenses 6,023 671 6,694 5,223
------------ ------------ ------------ ------------
Total
operating
expenses 87,694 2,087 89,781 22,432
Operating
income (loss) (451) 459 8 5,542
Nonoperating
Expenses:
Interest 15,885 479 16,364 5,623
Exit fees on
early
repayment
of mortgages 1,084 -- 1,084 --
Amortization
of deferred
financing
costs 820 -- 820 163
Interest income (1,303) -- (1,303) --
------------ ------------ ------------ ------------
Total
nonoperating
expenses 16,486 479 16,965 5,786
Income (loss)
before equity
in earnings of
unconsolidated
entities,
income taxes
and
minority
interest (16,937) (20) (16,957) (244)
Equity in
earnings of
unconsolidated
entities 853 27 880 1,002
------------ ------------ ------------ ------------
Income (loss)
before income
taxes and
minority
interest (16,084) 7 (16,077) 758
Income taxes 497 -- 497 --
------------ ------------ ------------ ------------
Net income
(loss)
before
minority
interest (16,581) 7 (16,574) 758
Minority
interest (1,040) -- (1,040) --
------------ ------------ ------------ ------------
Net income
(loss) $ (15,541) $ 7 $ (15,534) $ 758
============ ============ ============ ============
Earnings per
share
information:
Loss per share --
basic and
diluted $ (0.67)
============
Weighted average
common shares
outstanding-
basic and
diluted 23,063,110
============
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CALCULATION OF FFO AND FFOA
(Amounts in thousands, except share and per share data)
Three Three Twelve
months months Jan. 31 Jan. 1 months
ended ended to to ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2005 2004
------------------------------ --------------------
(EDR (EDR (EDR (EDR and EDR (EDR
Consol- Prede- Consol- Prede- Prede-
idated) cessor) idated) cessor) cessor)
-------- -------- -------- --------------------
Net income
(loss) $ 2,008 $ 596 $(15,541) $ 7 $ 758
Real estate
related
depreciation
and
amortization 5,458 784 28,636 260 3,110
-------- -------- -------- -------- --------
Funds from
operations
("FFO") 7,466 1,380 13,095 267 3,868
Elimination
of one-time
IPO related
transactions:
Charge for
profit
interest
units -- -- 4,039 -- --
Write-off of
fees
associated
with
repayment
of mortgage
debt -- -- 1,084 -- --
Loss of
deferred
revenue due
to purchase
accounting
(a) -- -- 1,233 -- --
-------- -------- -------- -------- --------
Impact of IPO
related
transactions -- -- 6,356 -- --
-------- -------- -------- -------- --------
Funds from
operations --
adjusted
("FFOA") $ 7,466 $ 1,380 $ 19,451 $ 267 $ 3,868
======== ======== ======== ======== ========
FFO per share
-- weighted
average
stocks/units $ 0.27 $ 0.52
FFOA per
share --
weighted
average
stocks/units $ 0.27 $ 0.78
Weighted
average
shares/
units 28,150,867 24,941,717
FFO per
share --
potentially
dilutive
stocks/units $ 0.26 $ 0.46
FFOA per
share --
potentially
dilutive
stocks/units $ 0.26 $ 0.69
Total
potentially
dilutive
common and
restricted
stock and
partnership
units 28,302,228 28,302,228
========== ==========
------------------------
(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.
2006 OUTLOOK
CONSOLIDATED & COMBINED STATEMENT OF FUNDS FROM OPERATIONS
(Unaudited, amounts in thousands, except share and per share data)
For the Year Ending
Dec. 31, 2006
--------------------------
Low Range High Range
----------- -----------
Net income (loss) $ (11,621) $ (10,191)
Real estate related depreciation and
amortization 39,192 39,192
----------- -----------
Funds from operations ("FFO") $ 27,571 $ 29,001
=========== ===========
FFO per share -- potentially dilutive
stocks/units $ 0.97 $ 1.02
=========== ===========
Total potentially dilutive common and
restricted stock and partnership
units 28,302,228
===========
------------------------
The fiscal 2006 guidance is based on our judgment and current
expectations. The guidance is forward looking and exclusive of any
financing or capital transactions and any acquisitions other than
the Place portfolio acquisition. Actual results may be affected by
many factors, including, but not limited to, the following: (i) the
leasing rates and occupancy levels achieved at our student housing
communities; (ii) the realization of development services revenue
relating to the timing of construction activity of our on-campus
development projects; (iii) the amount of income recognized by the
taxable REIT subsidiary and any corresponding income tax expense;
(iv) interest rate risk and (v) the start-up costs related to the
compliance with Section 404 of the Sarbanes-Oxley Act.