MEMPHIS, Tenn., July 31, 2007 (PRIME NEWSWIRE) -- Education Realty Trust, Inc. (NYSE:EDR) today announced financial results for the quarter ended June 30, 2007.
Highlights
* Total revenue increased 5.4% to $29.0 million for the quarter
ended June 30, 2007 from $27.5 million in the comparable quarter
of 2006. Operating income increased 24.8% to $5.3 million from
$4.3 million for the comparable quarter last year. Net income
for the second quarter 2007 improved to $0.2 million from a net
loss of $2.5 million for the same period last year;
* Funds from operations (FFO) for the second quarter 2007 was $6.7
million, including the impact of a $0.2 million loss on early
repayment of debt, an increase of 6.0% from $6.3 million for the
same quarter in 2006. FFO per weighted average share/unit was
$0.23 per share, unchanged from the same quarter last year;
* For the six months ended June 30, 2007, total revenue increased
5.8% to $59.0 million from $55.8 million for the same period last
year. Operating income increased to $12.1 million from $9.7
million a year ago and net loss improved to $0.3 million from a
$3.3 million loss for the same period last year. FFO increased
1.1% to $14.9 million from $14.7 million for the same period in
2006;
* Completed the $50.0 million sale of The Village on Tharpe, a
1,554 bed community in Tallahassee, Florida. The sale produced
net cash proceeds of $48.9 million and a gain on sale of $1.6
million, net of minority interest.
* Utilized sales proceeds and capital raised under EDR's direct
stock purchase plan to pay off all corporate level variable
interest debt, reducing debt by $62.3 million in the second
quarter of 2007.
* As of July 30, 2007, approximately 95.1% of the beds at
communities owned and managed by Education Realty Trust were pre-
leased for the 2007-08 academic year, compared to 94.3% on a
same-community basis at the same time last year.
* Construction started on EDR's first wholly owned development
project, a 528 bed student community at Southern Illinois
University in Carbondale, Illinois, slated for a 2008 opening.
* Management reaffirms previous full-year 2007 FFO guidance of
$0.88 to $0.92 per weighted average share/unit.
"We took several significant steps this quarter to enhance shareholder value. We sold a non-strategic asset for $50.0 million and redeployed our capital to fully retire all the company's high-cost, variable rate debt," said Paul Bower, Chairman, Chief Executive Officer and President of Education Realty Trust, Inc. "We broke ground on our first wholly owned development since becoming a public company, a 528 bed student community at Southern Illinois University in Carbondale, an underserved market where we anticipate strong demand."
"In addition, our team managed our core portfolio very well. On a same-community basis, revenues, net operating income, occupancy rates and operating margins improved in the second quarter and first half of 2007 from the comparable periods a year ago," Bower said. "And our pre-leasing experience year-to-date indicates we are on track for a good start to the 2007-2008 academic year."
Second Quarter Operating Results
Total revenue increased $1.5 million to $29.0 million for the quarter ended June 30, 2007, a 5.4% increase from the comparable quarter in 2006. Revenue growth for the quarter was achieved in all business segments. Student housing leasing revenue increased $1.3 million or 6.7% to $21.0 million. Third-party development services revenue increased $0.2 million, or 17.4%, to $1.0 million. Third-party management services revenue increased 3.1% to $0.7 million. Operating expense reimbursements, which represent the direct pass-through of reimbursable expenses, also increased approximately $0.3 million to $2.2 million as a result of increased third-party management business quarter over quarter.
Operating expenses increased 1.9% to $23.6 million for the second quarter of 2007 from $23.2 million in the second quarter of 2006, resulting in operating income of $5.3 million for the second quarter of 2007, an increase of 24.8% over the prior year. Student housing leasing operating expenses increased $0.6 million or 7.4% quarter over quarter, mainly the result of an additional property that was acquired in the second half of 2006 and increases in utilities, insurance costs and real estate taxes. General and administrative costs increased $0.4 million, which primarily consisted of increases in payroll and staffing costs. Reimbursable operating expenses increased $0.3 million quarter over quarter as noted above. These increases were offset by a $0.7 million decrease in depreciation and amortization quarter over quarter and a $0.2 million decline in student housing food service operating expenses as a result of a contract ending December 31, 2006.
On a same-community basis, student housing leasing revenue for the second quarter 2007 was up $1.0 million or 4.9% to $20.5 million over the prior year as a result of improvement in rates as well as a slight occupancy improvement. Physical occupancies improved approximately 90 basis points to 91.4% for the second quarter of 2007 and economic occupancies improved 390 basis points to 95.4%. Operating expenses on a same-community basis increased $0.4 million or 4.4% quarter over quarter, representing higher utilities, insurance costs and real estate taxes. As a result, same-community margins improved to 55.6% from 55.3% and net operating income increased 5.3% to $11.4 million.
Nonoperating expenses decreased $0.1 million to $7.3 million in the second quarter of 2007 from $7.4 million in the second quarter of 2006. Interest expense, the main component of nonoperating expenses, decreased $0.3 million or 3.6% due to the retirement of outstanding variable rate corporate debt during the second quarter of 2007. Related to this retirement, we incurred a $0.2 million loss on early repayment of debt representing the write-off of deferred financing fees.
Equity in earnings decreased $0.2 million from the second quarter of 2006 as a result of fewer development projects contracted through joint ventures and net losses at two of three new student housing community joint ventures entered into during the second half of 2006. Including a $0.2 million decrease in tax expense and a $0.1 million decrease in minority interest benefit, the second quarter 2007 ended with a loss from continuing operations of $1.8 million or $0.06 per share compared to a loss from continuing operations of $3.0 million or $0.11 per share for the quarter ended June 30, 2006 an improvement of 38.7% or $1.1 million.
During the quarter, The Village on Tharpe, a 1,554 bed community in Tallahassee, FL was sold to a third party for $50.0 million. This property's operating results have been included as discontinued operations for all periods presented. The sale resulted in a gain of $1.6 million which contributed to a $2.7 million increase in net income quarter over quarter.
Funds from operations (FFO) totaled $6.7 million in the second quarter of 2007, compared to $6.3 million in the second quarter of 2006. FFO per weighted average share/unit was flat to prior year at $0.23. A reconciliation of FFO to net income and net loss is included in the financial tables accompanying this media release.
Occupancy and Leasing
Same-community physical occupancy increased 90 basis points to 91.4% for the quarter ended June 30, 2007, from 90.5% for the quarter ended June 30, 2006. Same-community economic occupancy increased 390 basis points to 95.4% for the second quarter of 2007 from 91.5% for the second quarter of 2006.
As of July 30, 2007, the company reported pre-leasing activity on a same-community basis at Education Realty Trust owned and managed communities stood at 95.1% for the upcoming 2007-08 academic year, compared to 94.3% at the same time last year.
Development Services Activity
During the quarter, the company's development services subsidiary, Allen & O'Hara Development Company, LLC, (AODC) started construction on the 746 bed second phase of the development project at Slippery Rock University in Pennsylvania and on the 1,094 bed second phase of the development project at Indiana University of Pennsylvania. Presently, AODC has 11 projects with 9,028 beds under construction or in pre-development for third parties in five states.
Subsequent to the end of the quarter, site work started on a new wholly owned student community adjacent to Southern Illinois University in Carbondale, Illinois. This project represents the first in a company strategy of developing communities for its own ownership. The 528 bed community is scheduled for completion by the beginning of the 2008-2009 academic year.
Management Services Activity
During the quarter ended June 30, 2007, the company's management services subsidiary, Allen & O'Hara Education Services, Inc. (AOES) signed a new multi-year management agreement with University Enterprises, Inc., an affiliate of California State University at Sacramento, to manage a 443 bed student community known as the Upper Eastside Lofts.
Supplemental Information
The Company has scheduled a conference call for interested parties at 11 a.m. (Eastern Time) on Wednesday, August 1, featuring Education Realty Trust Chairman, President and Chief Executive Officer Paul Bower and Executive Vice President and Chief Financial Officer Randall H. Brown, who will discuss the Company's performance.
The conference call will be accessible by telephone, streaming Internet audio and podcast. To access the call, participants from within the United States may dial 800.789.2796 and participants from outside the United States may dial 617.614.6204. The pass code for this call is 78998435. Participants who prefer may access the call via the Internet at www.educationrealty.com.
A taped rebroadcast of the earnings call will be available shortly after its completion on August 1 through August 8, 2007. To access the rebroadcast, the domestic number is 888.286.8010, the international number is 617.801.6888 and the pass code is 55674513. A replay of the call and a version for podcast will also be available through www.educationrealty.com or www.reitcafe.com.
About Education Realty Trust
Education Realty Trust, Inc. (NYSE:EDR) is a self-administered, self-managed real estate investment trust that owns, develops and manages high-quality student housing communities throughout the United States. Led by a team with more than 190 years of shared industry experience, EDR is one of America's largest owners and operators of collegiate student housing. Its portfolio includes 67 communities in 21 states with 40,378 owned and managed beds and 12,474 beds managed for third parties. 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)
June 30, December 31,
2007 2006
--------- ---------
(Unaudited)
Assets
Student housing properties, net $ 743,293 $ 804,759
Assets under development 1,941 --
Corporate office furniture, net 1,324 752
Cash and cash equivalents 4,081 6,427
Restricted cash 8,130 9,154
Student contracts receivable, net 432 227
Receivable from affiliates 357 369
Management fee receivable from third parties 304 669
Goodwill and other intangibles, net 3,567 3,649
Other assets 11,006 9,452
--------- ---------
Total assets $ 774,435 $ 835,458
========= =========
Liabilities and stockholders' equity
Liabilities:
Mortgage loans, net of unamortized premium/
discount $ 423,146 $ 423,933
Other long term debt -- 47,000
Revolving line of credit -- 22,400
Accounts payable and accrued expenses 10,092 10,764
Deferred revenue 8,001 9,073
--------- ---------
Total liabilities 441,239 513,170
--------- ---------
Minority interest 18,812 19,289
--------- ---------
Commitments and contingencies -- --
Stockholders' equity:
Common stock, $.01 par value, 200,000,000
shares authorized, 28,413,849 and 26,810,552
shares issued and outstanding at June 30,
2007 and December 31, 2006, respectively 284 268
Preferred shares, $0.01 par value, 50,000,000
shares authorized, no shares issued and
outstanding -- --
Additional paid-in capital 342,415 330,374
Warrants -- 375
Accumulated deficit (28,315) (28,018)
--------- ---------
Total stockholders' equity 314,384 302,999
--------- ---------
Total liabilities and stockholders' equity $ 774,435 $ 835,458
========= =========
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Unaudited
Three months Three months
ended ended
June 30, June 30,
2007 2006
----------- -----------
Revenues:
Student housing leasing revenue $ 21,031 $ 19,702
Student housing food service revenue 522 807
Other leasing revenue 3,434 3,434
Third-party development services 1,024 872
Third-party management services 721 699
Operating expense reimbursements 2,227 1,950
----------- -----------
Total revenues 28,959 27,464
----------- -----------
Operating expenses:
Student housing leasing operations 9,402 8,755
Student housing food service operations 511 724
General and administrative 3,560 3,185
Depreciation and amortization 7,924 8,575
Reimbursable operating expenses 2,227 1,950
----------- -----------
Total operating expenses 23,624 23,189
----------- -----------
Operating income 5,335 4,275
----------- -----------
Nonoperating expenses:
Interest expense 6,999 7,261
Amortization of deferred financing costs 268 279
Loss on early repayment of debt 174 --
Interest income (167) (129)
----------- -----------
Total nonoperating expenses 7,274 7,411
----------- -----------
Loss before equity in earnings of
unconsolidated entities, income taxes,
minority interest, and discontinued
operations (1,939) (3,136)
Equity in earnings of unconsolidated
entities (41) 142
----------- -----------
Loss before income taxes, minority interest,
and discontinued operations (1,980) (2,994)
Income tax expense (benefit) (47) 186
----------- -----------
Net loss before minority interest and
discontinued operations (1,933) (3,180)
Minority interest (123) (226)
----------- -----------
Loss from continuing operations (1,810) (2,954)
----------- -----------
Discontinued operations: (a)
Income from discontinued operations, net of
minority interest 425 440
Gain on sale of student housing property,
net of minority interest 1,579 --
----------- -----------
Income from discontinued operations 2,004 440
----------- -----------
Net income (loss) $ 194 $ (2,514)
=========== ===========
Earnings per share information:
Income (loss) per share - basic and diluted
Continuing operations $ (0.06) $ (0.11)
Discontinued operations 0.07 0.01
----------- -----------
Net income (loss) per share $ 0.01 $ (0.10)
=========== ===========
Weighted-average common shares outstanding -
Basic and Diluted 28,012,275 26,349,426
=========== ===========
(a) Student housing properties that are designated as held for sale
and/or sold during a period are included in discontinued
operations. For the three and six months ended June 30, 2007 and
2006 the operating results of The Village on Tharpe are included
in discontinued operations as well as the subsequent gain on
the sale of this property. Both are net of minority interest.
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Unaudited
Six months Six months
ended ended
June 30, June 30,
2007 2006
----------- -----------
Revenues:
Student housing leasing revenue $ 43,003 $ 40,557
Student housing food service revenue 1,102 1,775
Other leasing revenue 6,868 6,868
Third-party development services 2,067 1,427
Third-party management services 1,603 1,398
Operating expense reimbursements 4,383 3,745
----------- -----------
Total revenues 59,026 55,770
----------- -----------
Operating expenses:
Student housing leasing operations 18,424 17,362
Student housing food service operations 1,072 1,583
General and administrative 7,050 6,165
Depreciation and amortization 16,004 17,224
Reimbursable operating expenses 4,383 3,745
----------- -----------
Total operating expenses 46,933 46,079
----------- -----------
Operating income 12,093 9,691
----------- -----------
Nonoperating expenses:
Interest expense 14,386 14,131
Amortization of deferred financing costs 548 553
Loss on early repayment of debt 174 --
Interest income (251) (338)
----------- -----------
Total nonoperating expenses 14,857 14,346
----------- -----------
Loss before equity in earnings of
unconsolidated entities, income taxes,
minority interest, and discontinued
operations (2,764) (4,655)
Equity in earnings of unconsolidated
entities 2 425
----------- -----------
Loss before income taxes, minority interest,
and discontinued operations (2,762) (4,230)
Income tax expense (benefit) (49) 82
----------- -----------
Net loss before minority interest (2,713) (4,312)
Minority interest (4) (114)
----------- -----------
Loss from continuing operations (2,709) (4,198)
----------- -----------
Discontinued operations: (a)
Income from discontinued operations, net of
minority interest 833 904
Gain on sale of student housing property,
net of minority interest 1,579 --
----------- -----------
Income from discontinued operations 2.412 904
----------- -----------
Net loss $ (297) $ (3,294)
=========== ===========
Earnings per share information:
Income (loss) per share - basic and diluted
Continuing operations $ (0.10) $ (0.16)
Discontinued operations 0.09 0.03
----------- -----------
Net income (loss) per share $ (0.01) $ (0.13)
=========== ===========
Weighted-average common shares outstanding -
Basic and Diluted 27,592,873 26,309,154
=========== ===========
(a) Student housing properties that are designated as held for sale
and/or sold during a period are included in discontinued
operations. For the three and six months ended June 30, 2007 and
2006 the operating results of The Village on Tharpe are included
in discontinued operations as well as the subsequent gain on
the sale of this property. Both are net of minority interest.
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CALCULATION OF FFO
(Amounts in thousands, except share and per share data)
Unaudited
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
----------- ------------------------ -----------
Net income (loss) $ 194 $ (2,514) $ (297) $ (3,294)
Gain on sale of
student housing
property (1,579) -- (1,579) --
Real estate related
depreciation and
amortization 7,811 8,487 15,809 17,052
Equity portion of
real estate
depreciation and
amortization on
equity investees 92 -- 190 --
Depreciation and
amortization of
discontinued
operations 242 512 711 1,016
Minority interest (105) (206) 31 (65)
----------- ----------- ----------- -----------
Funds from
operations ("FFO") 6,655 6,279 14,865 14,709
=========== =========== =========== ===========
FFO per weighted
average share/
unit (a) $ 0.23 $ 0.23 $ 0.51 $ 0.52
=========== =========== =========== ===========
Weighted average
shares/units (a) 29,465,325 27,850,196 29,046,143 28,025,579
=========== =========== =========== ===========
Notes:
(a) -- Funds from operations (FFO) per weighted average
shares/units was computed using the weighted average
of all shares and partnership units outstanding,
regardless of their dilutive impact.
FFO is an important supplemental measure of operating performance for
EDR. 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 rate, rental rates, operating costs, development
activities and interest costs, providing perspective not immediately
apparent from net income.
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 the EDR annual report on form
10-K for the year ended December 31, 2006.