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): July 28, 2014

Education Realty Trust, Inc.
(Exact Name of Registrant as Specified in 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 2.02. Results of Operations and Financial Condition.

On July 28, 2014, Education Realty Trust, Inc. (the "Company") issued a press release announcing its results of operations for the six months ended June 30, 2014 and made available updated supplemental information concerning the ownership, operations and portfolio of the Company. A copy of the press release and this supplemental information are furnished as Exhibits 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K.

This Current Report on Form 8-K and the exhibits attached hereto are being furnished by the Company pursuant to Item 2.02 and Item 7.01 of Form 8-K in satisfaction of the public disclosure requirements of Regulation FD and Item 2.02 of Form 8-K, insofar as they disclose historical information regarding the Company’s results of operations or financial condition for the three and six months ended June 30, 2014.

In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2 hereto) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 7.01. Regulation FD Disclosure.

The disclosure contained in Item 2.02 is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are being furnished with this Current Report on Form 8-K.
    
Exhibit No.
 
Description
99.1
 
Press Release dated July 28, 2014
99.2
 
Second Quarter 2014 Supplemental Financial Report





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: July 28, 2014
By:
/s/ Randall L. Churchey
 
 
Randall L. Churchey
Chief Executive Officer and President



 




INDEX TO EXHIBITS

Exhibit No.
 
Description
99.1
 
Press Release dated July 28, 2014
99.2
 
Second Quarter 2014 Supplemental Financial Report



EDR-2014.6.30-Q2 Earnings Release


 
 
 


EdR ANNOUNCES SECOND QUARTER 2014 RESULTS
- Core FFO per Share Up 15% -

MEMPHIS, TN, July 28, 2014 - EdR (NYSE:EDR), one of the nation’s largest developers, owners and managers of collegiate housing, today announced results for the quarter ended June 30, 2014.

Company Highlights

•
Core funds from operations (“Core FFO”) was $17.3 million, or $0.15 per share/unit for the second quarter, compared to $14.5 million, or $0.13 per share/unit in the prior year, an increase of 15% on a per share basis;
•
Same-community net operating income ("NOI") improved 2.6% for the quarter on a 2.5% growth in revenue partially offset by a 2.4% increase in operating expenses;
•
Preleasing for the 2014-2015 lease term is 360 basis points ahead of last year with the same-community portfolio 90.9% preleased. The same-community portfolio is projected to open the 2014-2015 lease term with an increase in revenue ranging from 3% to 4%, comprised of a 1% to 2% increase in occupancy and an approximate 2% growth in net rental rates;
•
Completed an over-subscribed and upsized follow-on equity offering raising $239.4 million in net proceeds that were used to reduce the balance on the Company's revolving credit facility and provide financing for:
◦
Two new developments to be delivered summer 2015 for $90.0 million, adjacent to the University of Louisville and the University of Connecticut;
◦
The pending acquisition of The District on Apache, a 900-bed community adjacent to Arizona State University that is expected to close in September 2014 for approximately $92.0 million;
•
Received $3.0 million guarantee fee and complete repayment of $18.0 million mezzanine investment related to the participating development at Johns Hopkins on July 1st;
•
In July, sold two communities for $29.9 million; and
•
Updated full year Core FFO guidance of $0.61 - $0.64 per share/unit, representing an 11% to 16% increase over 2013.



1


“We achieved another quarter of double-digit Core FFO per share growth,” commented Randy Churchey, EdR’s president and chief executive officer.  “Furthermore, with a record 6,000 beds opening this summer in twelve buildings at eight universities, we are well positioned for the future. Our pipeline of opportunities at major universities remains robust and we are excited about our prospects as we move ahead."


Net Income (Loss) Attributable to Common Stockholders

Net income attributable to common stockholders for the quarter was a loss of $8.8 million, or $0.08 per diluted share, compared to net income of $3.8 million, or $0.03 per diluted share, for the prior year. The Company recognized a $9.9 million impairment charge in June of 2014 related to pending dispositions and recognized a gain on sale of assets of $3.9 million in the second quarter of 2013. Excluding these gains and loss on asset transactions, net income increased $1.2 million for the quarter. The main contributors to this increase were a $5.8 million increase in community net operating income (NOI) partially offset by a $2.9 million increase in depreciation and a $1.2 million increase in interest and other nonoperating expenses.


Core Funds From Operations

Core FFO for the quarter was $17.3 million, as compared to $14.5 million in the prior year, an increase of 18.8%. Core FFO per share/unit for the quarter increased 15.4% to $0.15. The improvement in Core FFO mainly reflects the increase in operating profits from new communities offset by higher interest expense in 2014.

A reconciliation of funds from operations (“FFO”) and Core FFO to net income is included with the financial tables accompanying this release.


Same-Community Results

Net operating income was $18.7 million for the quarter, an increase of 2.6%, or $0.5 million, from the prior year. Revenue for the quarter was up 2.5% as compared to the prior year with a 1.9% increase in rental rates, a 0.4% improvement in occupancy and a 0.2% increase in other income. Operating expenses for the quarter increased $0.3 million, or 2.4%, mainly due to a $0.3 million increase in real estate taxes. In total, all other operating expenses increased approximately 40 basis points for the quarter.

"I am proud of our team's expense controls in 2014," stated Christine Richards, EdR's senior vice president and chief operating officer. "We have remained focused on controlling direct operating expenses while maintaining our strong leasing velocity for the fall."


2014-2015 Preleasing

Preleasing for the same-community portfolio is currently 360 basis points ahead of prior year with 90.9% of the beds preleased for the fall. Based on current leasing velocity and market conditions, the same-community portfolio is projected to open the 2014-2015 lease term with revenue growth ranging from 3% to 4%, comprised of a 1% to 2% increase in occupancy and an approximate 2% growth in average net rental rates.


2


The Company provides additional leasing information in its quarterly earnings supplement located at http://www.snl.com/irweblinkx/yearlypresentations.aspx?iid=4095382.


University of Kentucky ("UK") Campus Housing Revitalization Plan

Construction on the next phase of the UK campus housing revitalization plan, which includes five buildings with 2,381 beds at a total project cost of $138.0 million, is proceeding as planned for opening next month. The 2,982 beds that will be open this fall, which include the 601 beds delivered in 2013, are 180% applied and 100% leased for this fall.

Construction on the 2015 deliveries, which include 1,610 beds for a total cost of $101.2 million, and the 2016 deliveries, which include 1,141 beds for a total cost of $83.9 million, are all underway and proceeding as planned. To date, under this long-term relationship with UK, a total of 5,733 beds in live learn communities have been approved for a total cost approaching $350.0 million.


Investment Activity

Construction is on schedule for the 2014 and 2015 development deliveries at the universities of Colorado, Connecticut, Minnesota and Georgia as well as at Duke University. The 2014 development deliveries, including the pre-sale at Florida International University, are all on schedule to open next month and in total have increased the Company's gross assets by 19%.

On July 1st, the third-party owners of our development at Johns 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 mezzanine investment made by EdR. At the time of the refinancing, the Company also received its $3.0 million fee for guaranteeing the original construction loan.

The Company entered into agreements to purchase The District on Apache - a collegiate housing community serving Arizona State University (ASU) - for approximately $92.0 million. The 900-bed community, within walking distance of the ASU Tempe campus, opened in August 2013 and is 100% occupied. The community is currently 98% preleased for this fall. The acquisition is anticipated to close in September and has a targeted first-year, unleveraged economic yield of 6.25%.

In June, the Company began construction on the fourth phase of its highly successful development pedestrian to the University of Connecticut. Scheduled to open summer of 2015, the community will add 390 beds in 204 units for a total cost of $45.0 million. This phase will be adjacent to the first three phases which total 619 beds in 414 units that are 100% pre-leased for the 2014-2015 lease term.

The Company executed joint venture agreements in June with Landmark Properties to develop, own and manage a $45.0 million collegiate community adjacent to the University of Louisville. This is the first cottage-style community that is adjacent to a major university campus. EdR will be 75% owner and will manage the community through lease-up and after its summer 2015 opening.

In July, the Company completed the previously announced sales of a 480-bed community built in 2003 that is approximately two miles from the University of South Carolina campus and a 576-bed community built in 1999 that is about a mile from the core of Auburn University’s campus. The $29.9 million of net proceeds from these dispositions were used to pay-off approximately $16.7 million of mortgage debt, with an average

3


interest rate of 4.9%, and to pay down the Company's unsecured revolving credit facility. In the third quarter the Company will recognize an approximate gain of $8 million related to these sales.

The Company is in the process of marketing four additional communities for sale. Based on current estimates, the Company would incur losses on the sale of two of the communities and gains on the sale of the other two. Generally accepted accounting principles require an impairment charge be recognized when the carrying value of an asset is determined to be impaired while gains are not recognized until the time of sale. As such, the Company recorded a non-cash impairment charge of $9.9 million in the second quarter related to two of the marketed communities. The Company anticipates recording a gain on the sale of the other two communities if and when the sales close; however, there is no guarantee that all or any of these communities will ultimately be sold.


Capital Structure

The Company completed a follow-on equity offering in June, selling 24.5 million shares including the exercise of the underwriters' option to purchase additional shares. The offering was upsized due to overwhelming investor demand, raising $239.4 million in net proceeds that were used to pay down the Company's unsecured revolving credit facility, reducing our debt to gross assets from 43.4% to 32.5%. The proceeds have effectively prefunded the new acquisition and developments that were announced as part of the offering.

At June 30, 2014, the Company had cash and cash equivalents totaling $11.2 million and going forward has$400 million of availability on its unsecured revolving credit facility. The Company's debt to gross assets was 32.5%, its net debt to EBITDA - adjusted was 5.6x, and its interest coverage ratio was 4.4x. The Company has the financial capacity through operating cash flow and availability under its revolving credit facility to fund all of its announced acquisitions and developments.


Earnings Guidance and Outlook

The Company is increasing its post follow-on equity offering and related transactions low- and high-end Core FFO guidance by 7% and 2%, respectively, to a range of $0.61 to $0.64 per share/unit, which represents an 11% to 16% growth rate over 2013. This guidance increase is mainly attributable to (1) better than expected net operating income from all communities derived from our successful leasing efforts for the 2014/2015 leasing cycle, and (2) the successful refinancing of the Johns Hopkins development (collection of the $3 million debt guarantee fee partially offset by the foregone interest income for the second half of 2014 due to the repayment of our $18 million mezzanine investment), which was not included in the previous low-end guidance range.

The June follow-on equity offering and related transactions, which included two asset sales, one pending acquisition and deleveraging the balance sheet, reduced the Company's original Core FFO per share/unit guidance by $0.05 to a range of $0.57 to $0.63.

Consistent with Company policy, guidance does not include the impact of any unannounced third-party development or management contracts, acquisitions including pre-sale agreements or purchase options, dispositions, ONE Plansm developments or capital transactions.


4



Webcast and Conference Call

EdR will host a conference call for investors and other interested parties beginning at 10:00 a.m. Eastern Time on Monday, July 28, 2014.  The call will be hosted by Randy Churchey, president and chief executive officer.

The conference call will be accessible by telephone and the Internet.  To access the call, participants in the U.S. may dial (877) 705-6003, and participants outside the U.S. may dial (201) 493-6725.  Participants may also access the call via live webcast by visiting the company's investor relations website at www.EdRTrust.com.

The replay of the call will be available at approximately 1:00 p.m. Eastern Time on Monday, July 28, 2014 through midnight Eastern Time on Monday, August 11, 2014.  To access the replay, the domestic dial-in number is (877) 870-5176, the international dial-in number is (858) 384-5517, and the passcode is 13586081.  The archive of the webcast will be available on the company's website for a limited time.



About EdR

EdR (NYSE:EDR) is one of America’s largest owners, developers and managers of collegiate housing. EdR is a self-administered and self-managed real estate investment trust that owns or manages 67 communities in 22 states with nearly 37,000 beds within more than 12,800 units. For more information, please visit the company's website at www.EdRTrust.com.


Contact:

Brad Cohen
ICR, LLC
(203) 682-8211
bcohen@icrinc.com

J. Drew Koester
EdR
Senior Vice President and
Chief Accounting Officer
(901) 259-2500

5



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,” which relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements are based on current expectations. You should not rely on forward-looking statements because the matters that they describe are subject to known and unknown risks and uncertainties that could cause the Company’s business, financial condition, liquidity, results of operations, Core FFO, FFO and prospects to differ materially from those expressed or implied by such statements. Such risks are set forth under the captions “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (or similar captions) in EdR's most recent annual report on Form 10-K, and as described in EdR's other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and, except as otherwise may be required by law, the Company undertakes no obligation to update publicly or revise any guidance or other forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.


Non-GAAP Financial Measures

Funds from Operations (FFO)

As defined by the National Association of Real Estate Investment Trusts, FFO represents net income (loss) (computed in accordance with U.S. generally accepted accounting principles ("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 will be calculated to reflect FFO on the same basis. The Company presents FFO available to all stockholders and unitholders because management considers it to be an important supplemental measure of the Company’s operating performance, believes it assists in the comparison of the Company’s operating performance between periods to that of different REITs and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their operating results. As such, the Company also excludes the impact of noncontrolling interests, only as they relate to operating partnership units, in the calculation. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income.

The Company also uses core funds from operations, or Core FFO, as an operating 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

6


also includes adjustments to exclude the impact of straight-line adjustment for ground leases, gains/losses on extinguishment of debt, transaction costs related to acquisitions and reorganization or severance costs. The Company believes that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of the Company’s assets. In addition the Company believes that Core FFO is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as most REITs provide some form of adjusted or modified FFO.

Net Operating Income (NOI)

The Company considers NOI to be a useful measure of its collegiate housing operating performance. The Company defines 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, and accordingly, the Company's NOI may not be comparable to other REITs. The Company believes that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. The Company 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 the Company’s operating results. However, NOI should only be used as an alternative measure of the Company’s financial performance.

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); and (9) non-controlling interest. Management considers Adjusted EBITDA useful to an investor in evaluating and facilitating comparisons of the Company's operating performance between periods and between REITs by removing the impact of the Company's capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results. Adjusted EBITDA should only be used as an alternative measure of the Company's financial performance.

Net debt to EBITDA - adjusted is calculated to normalize the impact of non-producing construction debt. In the calculation, net debt is total debt less cash and excludes non-producing debt related to assets under development at time of calculation. EBITDA is Pro Forma Adjusted EBITDA, which includes 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.


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. Debt to gross assets should only be used as an alternative measure of the Company's financial performance.

7


EdR AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)


 
 
June 30, 2014
 
December 31, 2013
 
(unaudited)
 
 
Assets
 
 
 
 
Collegiate housing properties, net
$
1,307,519

 
$
1,388,885

 
Collegiate housing properties - held for sale, net
21,166

 
—

 
Assets under development
233,441

 
116,787

 
Cash and cash equivalents
11,162

 
22,073

 
Restricted cash
14,069

 
12,253

 
Other assets
78,690

 
70,567

 
 
 
 
 
Total assets
$
1,666,047

 
$
1,610,565

 
 
 
 
 
Liabilities and equity
 
 
 
Liabilities:
 
 
 
 
Mortgage and construction loans, net of unamortized premium
$
361,173

 
$
422,681

 
Unsecured revolving credit facility
66,000

 
356,900

 
Unsecured term loan
187,500

 
—

 
Accounts payable and accrued expenses
78,566

 
67,646

 
Deferred revenue
19,963

 
23,498

Total liabilities
713,202

 
870,725

 
 
 
 
 
Commitments and contingencies
—

 
—

 
 
 
 
 
Redeemable noncontrolling interests
9,780

 
9,871

 
 
 
 
 
Equity:
 
 
 
EdR stockholders’ equity:
 
 
 
 
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 139,437,355 and 114,740,155 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively
1,394

 
1,148

 
 
 
 
 
Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding
—

 
—

 
Additional paid-in capital
1,027,816

 
813,540

 
Accumulated deficit
(85,706
)
 
(88,964
)
 
Accumulated other comprehensive loss
(3,757
)
 
—

Total EdR stockholders’ equity
939,747

 
725,724

Noncontrolling interests
3,318

 
4,245

Total equity
943,065

 
729,969

 
 
 
 
 
Total liabilities and equity
$
1,666,047

 
$
1,610,565




8


EdR AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
(Unaudited)
 
Three months ended June 30,
 
2014
 
2013
Revenues:
 
 
 
Collegiate housing leasing revenue
$
46,309

 
$
37,335

Third-party development services
757

 
759

Third-party management services
786

 
823

Operating expense reimbursements
2,188

 
2,121

Total revenues
50,040

 
41,038

 
 
 
 
Operating expenses:
 
 
 
Collegiate housing leasing operations
20,975

 
17,812

Development and management services
2,282

 
1,618

General and administrative
1,677

 
1,942

Development pursuit, acquisition costs and severance
307

 
79

Depreciation and amortization
14,458

 
11,562

Ground leases
1,934

 
2,210

Loss on impairment of collegiate housing properties
9,870

 
—

Reimbursable operating expenses
2,188

 
2,121

 Total operating expenses
53,691

 
37,344

 
 
 
 
 Operating income (loss)
(3,651
)
 
3,694

 
 
 
 
Nonoperating expenses:
 
 
 
Interest expense
4,967

 
3,855

Amortization of deferred financing costs
514

 
410

Interest income
(41
)
 
(124
)
Total nonoperating expenses
5,440

 
4,141

 
 
 
 
Loss before equity in earnings (losses) of unconsolidated entities, income taxes and discontinued operations
(9,091)

 
(447
)
 
 
 
 
Equity in earnings (losses) of unconsolidated entities
(112
)
 
(22
)
Loss before income taxes and discontinued operations
(9,203)

 
(469
)
Less: Income tax benefit
(357
)
 
—

Loss from continuing operations
(8,846
)
 
(469
)
Income from discontinued operations
—

 
4,159

Net income (loss)
(8,846
)
 
3,690

 
 
 
 
Less: Loss attributable to the noncontrolling interests
(38
)
 
(142
)
Net income (loss) attributable to EdR common stockholders
$
(8,808
)
 
$
3,832

 
 
 
 
Other comprehensive loss:
 
 
 
 Loss on cash flow hedging derivatives
(2,394
)
 
—

Comprehensive income (loss)
$
(11,202
)
 
$
3,832

 
 
 
 
Earnings per share information:
 
 
 
Net income (loss) attributable to EdR common stockholders per share – basic and diluted:
$
(0.08
)
 
$
0.03

 
 
 
 
Weighted average share of common stock outstanding – basic
116,657

 
114,452

Weighted average share of common stock outstanding – diluted
116,657

 
114,452


9


EdR AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
(Unaudited)
 
Six months ended June 30,
 
2014
 
2013
Revenues:
 
 
 
Collegiate housing leasing revenue
$
97,020

 
$
76,788

Third-party development services
1,559

 
1,150

Third-party management services
1,804

 
1,792

Operating expense reimbursements
4,202

 
5,979

Total revenues
104,585

 
85,709

 
 
 
 
Operating expenses:
 
 
 
Collegiate housing leasing operations
43,143

 
35,531

Development and management services
4,623

 
3,389

General and administrative
3,794

 
3,776

Development pursuit, acquisition costs and severance
308

 
268

Depreciation and amortization
28,241

 
22,161

Ground leases
3,833

 
3,798

Loss on impairment of collegiate housing properties
11,780

 
—

Reimbursable operating expenses
4,202

 
5,979

 Total operating expenses
99,924

 
74,902

 
 
 
 
 Operating income
4,661

 
10,807

 
 
 
 
Nonoperating expenses:
 
 
 
Interest expense
10,568

 
7,909

Amortization of deferred financing costs
1,017

 
830

Interest income
(111
)
 
(243
)
    Loss on extinguishment of debt
649

 
—

Total nonoperating expenses
12,123

 
8,496

 
 
 
 
Income (loss) before equity in earnings (losses) of unconsolidated entities, income taxes, discontinued operations and gain on sale of collegiate housing communities
(7,462)

 
2,311

 
 
 
 
Equity in earnings (losses) of unconsolidated entities
(134
)
 
(42
)
 Income (loss) before income taxes, discontinued operations and gain on sale of collegiate housing communities
(7,596)

 
2,269

Less: Income tax benefit
(312
)
 
(237
)
Income (loss) from continuing operations
(7,284
)
 
2,506

Income from discontinued operations
—

 
4,662

Income (loss) before gain on sale of collegiate housing communities
(7,284
)
 
7,168

Gain on sale of collegiate housing communities
10,902

 
—

Net income
3,618

 
7,168

 
 
 
 
Less: Net income attributable to the noncontrolling interests
360

 
27

Net income attributable to EdR common stockholders
$
3,258

 
$
7,141

 
 
 
 
Other comprehensive loss:
 
 
 
 Loss on cash flow hedging derivatives
(3,757
)
 
—

Comprehensive income (loss)
$
(499
)
 
$
7,141

 
 
 
 
Earnings per share information:
 
 
 
Net income attributable to EdR common stockholders per share – basic and diluted:
$
0.03

 
$
0.06

 
 
 
 
Weighted average share of common stock outstanding – basic
115,833

 
114,045

Weighted average share of common stock outstanding – diluted
116,871

 
115,083



10


EdR AND SUBSIDIARIES
CALCULATION OF FFO AND CORE FFO
(Amounts in thousands, except per share/unit data)
(Unaudited)

 
Three months ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Net income (loss) attributable to EdR
$
(8,808
)
 
$
3,832

 
$
3,258

 
$
7,141

 
 
 
 
 
 
 
 
  Gain on sale of collegiate housing assets (1)
—

 
(3,895
)
 
(10,902
)
 
(3,895
)
  Impairment losses
9,870

 
—

 
11,780

 
—

  Real estate related depreciation and amortization
14,299

 
11,949

 
27,921

 
23,032

  Equity portion of real estate depreciation and amortization on equity investees
50

 
48

 
99

 
96

  Noncontrolling interests
(127
)
 
(98
)
 
178

 
71

FFO
15,284

 
11,836

 
$
32,334

 
$
26,445

 
 
 
 
 
 
 
 
FFO adjustments:
 
 
 
 
 
 
 
Loss on extinguishment of debt
—

 
—

 
649

 
—

  Acquisition costs
22

 
72

 
23

 
299

  Severance costs, net of tax
285

 
—

 
285

 
—

  Straight-line adjustment for ground leases (2)
1,212

 
1,715

 
2,425

 
2,807

FFO adjustments
1,519

 
1,787

 
3,382

 
3,106

 
 
 
 
 
 
 
 
FFO on Participating Developments: (3)
 
 
 
 
 
 
 
  Interest on loan to Participating Development
455

 
455

 
905

 
905

  Development fees on Participating Development, net of costs and tax
—

 
454

 
—

 
454

FFO on Participating Developments
455

 
909

 
905

 
1,359

 
 
 
 
 
 
 
 
Core FFO
$
17,258

 
$
14,532

 
$
36,621

 
$
30,910

 
 
 
 
 
 
 
 
FFO per weighted average share/unit (4)
$
0.13

 
$
0.10

 
$
0.28

 
$
0.23

 
 
 
 
 
 
 
 
Core FFO per weighted average share/unit (4)
$
0.15

 
$
0.13

 
$
0.31

 
$
0.27

 
 
 
 
 
 
 
 
Weighted average shares/units (4)
117,694

 
115,489

 
116,871

 
115,083

(1) The gain on sale of collegiate housing assets in 2013 is included in discontinued operations and the gain recognized in 2014 is included as gain on sale of collegiate housing communities on the Condensed Consolidated Statements of Comprehensive Income.
(2) This represents the straight-line rent expense adjustment required by GAAP related to ground leases. As the ground lease terms range from 40 to 99 years, the adjustment to straight-line these agreements becomes material to our operating results, distorting the economic results of the communities.
(3) FFO on participating developments represents the economic impact of interest and fees not recognized in net income due to the Company having a participating investment in the third-party development. The adjustment for interest income is based on terms of the loan.
(4) FFO and Core FFO per weighted average share/unit were computed using the weighted average of all shares and operating partnership units outstanding, regardless of their dilutive impact.

11


EdR AND SUBSIDIARIES
2014 GUIDANCE – RECONCILIATION OF FFO and CORE FFO
(Amounts in thousands, except per share/unit data)
(Unaudited)

 
 
Year ending December 31, 2014
 
 
Low End
 
High End
 
 
 
 
 
 
 
 
 
 
Net income attributable to EdR
 
$
28,135

 
$
31,999

 
 
 
 
 
Gain on sale of collegiate housing assets
 
(19,078)

 
(19,078)

Impairment losses
 
11,780

 
11,780

Real estate related depreciation and amortization
 
58,373

 
58,373

Equity portion of real estate depreciation and amortization on equity investees
 
198

 
198

Noncontrolling interests
 
513

 
513

FFO
 
$
79,921

 
$
83,785

FFO adjustments:
 
 
 
 
Loss on extinguishment of debt
 
649

 
649

Straight-line adjustment for ground leases (1)
 
4,835

 
4,835

  Acquisition costs
 
23

 
23

  Severance costs, net of tax
 
285

 
285

FFO adjustments
 
5,792

 
5,792

 
 
 
 
 
FFO on Participating Developments: (2)
 
 
 
 
Interest on loan to Participating Development
 
(5,582
)
 
(5,582
)
Development fees on Participating Development, net of costs and tax
 
(1,560
)
 
(1,560
)
FFO on Participating Developments
 
(7,142
)
 
(7,142
)
 
 
 
 
 
Core FFO
 
$
78,571

 
$
82,435

 
 
 
 
 
FFO per weighted average share/unit (3)
 
$
0.62

 
$
0.65

 
 
 
 
 
Core FFO per weighted average share/unit (3)
 
$
0.61

 
$
0.64

 
 
 
 
 
Weighted average shares/units (3)
 
128,805

 
128,805

 
 
 
 
 
Notes:
 
 
 
 
(1) Represents the straight-line rent expense adjustment required by GAAP related to ground leases. As ground lease terms range from 40 to 99 years, the adjustment to straight-line these agreements becomes material to our operating results, distorting the economic results of the communities.
(2) FFO on participating developments represents the economic impact of interest and fees not recognized in net income due to the Company having a participating investment in the third-party development. The adjustment for development fees is recognized under the same percentage of completion method of accounting used for third-party development fees. The adjustment for interest income is based on terms of the loan.
(3) FFO and Core FFO per weighted average share/unit were computed using the weighted average of all shares and operating partnership units outstanding, regardless of their dilutive impact.

12



EdR AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)


The following is a reconciliation of the Company's GAAP operating income to NOI for the three months ended June 30, 2014 and 2013 (in thousands):
 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
 
2014

2013
 
2014
 
2013
Operating income (loss)
 
$
(3,651
)
 
$
3,694

 
$
4,661

 
$
10,807

Less: Third-party development services revenue
 
757

 
759

 
1,559

 
1,150

Less: Third-party management services revenue
 
786

 
823

 
1,804

 
1,792

Plus: Development and management services expenses
 
2,282

 
1,618

 
4,623

 
3,389

Plus: General and administrative expenses
 
1,984

 
2,021

 
4,102

 
4,044

Plus: Ground leases
 
1,934

 
2,210

 
3,833

 
3,798

Plus: Impairment loss on collegiate housing property
 
9,870

 
—

 
11,780

 
—

Plus: Depreciation and amortization
 
14,458

 
11,562

 
28,241

 
22,161

NOI
 
$
25,334

 
$
19,523

 
$
53,877

 
$
41,257


The following is a reconciliation of the Company's GAAP net income to Adjusted EBITDA for the trailing twelve months ended June 30, 2014 (in thousands):
 
 
Six months ended June 30,
 
Plus: Year Ended December 31,
 
Less: Six months ended June 30,
 
Trailing Twelve Months ended June 30,
 
 
2014
 
2013
 
2013
 
2014
Net income attributable to common stockholders
 
$
3,258

 
$
4,323

 
$
7,141

 
$
440

Straight line adjustment for ground leases
 
2,425

 
5,255

 
2,807

 
4,873

Acquisition costs
 
23

 
393

 
299

 
117

Depreciation and amortization
 
28,241

 
48,098

 
22,161

 
54,178

Depreciation and amortization - discontinued operations
 
—

 
1,767

 
1,086

 
681

Loss on impairment of collegiate housing assets
 
11,780

 
5,001

 
—

 
16,781

Gain on sale of collegiate housing assets
 
(10,902
)
 
(3,913
)
 
(3,895
)
 
(10,920
)
Interest expense
 
10,568

 
17,526

 
7,909

 
20,185

Other nonoperating expense
 
1,555

 
1,311

 
587

 
2,279

Income tax expense (benefit)
 
(312
)
 
203

 
(237
)
 
128

Noncontrolling interests
 
360

 
308

 
27

 
641

Adjusted EBITDA
 
$
46,996

 
$
80,272

 
$
37,885

 
89,383

Annualize acquisitions/developments (1)
 
—

 
—

 
—

 
4,426

Pro Forma Adjusted EBITDA
 
$
46,996

 
$
80,272

 
$
37,885

 
$
93,809

 
 
 
 
 
 
 
 
 
(1) Proforma adjustment to reflect all acquisitions and development deliveries as if such transactions had occurred on the first day of the period presented.

13



The following is a reconciliation of the Company's GAAP total assets to gross assets as of June 30, 2014 and December 31, 2013 (in thousands):
 
 
As of June 30,
 
As of December 31,
 
 
2014
 
2013
Mortgage and construction loans, net of unamortized premium
 
$
361,173

 
$
422,681

Unamortized premium
 
1,900

 
2,291

Mortgage and construction loans
 
359,273

 
420,390

 
 
 
 
 
Unsecured revolving credit facility
 
66,000

 
356,900

Unsecured term loan facility
 
187,500

 
—

 
 
 
 
 
Total debt
 
$
612,773

 
$
777,290

 
 
 
 
 
Total assets
 
$
1,666,047

 
$
1,610,565

Accumulated depreciation(1)
 
216,530

 
204,181

Gross assets
 
$
1,882,577

 
$
1,814,746

 
 
 
 
 
Debt to gross assets
 
32.5
%
 
42.8
%
 
 
 
 
 
(1) Represents accumulated depreciation on real estate assets.


14
EDR-2014.6.30 Supplemental






FINANCIAL HIGHLIGHTS

 (Amounts in thousands, except per share data, unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 OPERATING DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2014
2013
 
$ Chg
% Chg
 
2014
2013
 
$ Chg
% Chg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-community revenue
$
33,860

$
33,043


$
817

2.5
 %

$
69,936

$
68,065


$
1,871

2.7
 %
 
Total community revenue
46,309

37,335


8,974

24.0
 %

97,020

76,788


20,232

26.3
 %
 
Total revenue
50,040

41,038


9,002

21.9
 %

104,585

85,709


18,876

22.0
 %
 




 
 




 
 
 
Same-community net operating income
18,713

18,245


468

2.6
 %

39,528

38,762


766

2.0
 %
 
Total community net operating income
25,334

19,523


5,811

29.8
 %

53,877

41,257


12,620

30.6
 %
 
Total operating income (loss)
(3,651
)
3,694


(7,345
)
(198.8
)%

4,661

10,807


(6,146
)
(56.9
)%
 




 
 




 
 
 
Net income (loss)
(8,808
)
3,832


(12,640
)
(329.9
)%

3,258

7,141


(3,883
)
(54.4
)%
 
Per share - basic & diluted
$
(0.08
)
$
0.03


$
(0.11
)
(366.7
)%

$
0.03

$
0.06


$
(0.03
)
(50.0
)%
 




 
 




 
 
 
Funds from operations (FFO)
15,284

11,836


3,448

29.1
 %

32,334

26,445


5,889

22.3
 %
 
Per weighted average share/unit (1)
$
0.13

$
0.10


$
0.03

30.0
 %

$
0.28

$
0.23


$
0.05

21.7
 %
 




 
 




 
 
 
Core funds from operations (Core FFO)
17,258

14,532


2,726

18.8
 %

36,621

30,910


5,711

18.5
 %
 
Per weighted average share/unit (1)
$
0.15

$
0.13


$
0.02

15.4
 %

$
0.31

$
0.27


$
0.04

14.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
6/30/2014

12/31/2013

 
 
 
 
 
 
 
 
 
 
Debt to gross assets
32.5
%
42.8
%
 
 
 
 
 
 
 
 
 
 
Net debt to enterprise value
28.5
%
42.5
%
 
 
 
 
 
 
 
 
 
 
Interest coverage ratio (TTM)
4.4
x
4.6
x
 
 
 
 
 
 
 
 
 
 
Net debt to EBITDA - Adjusted (TTM)
5.6
x
6.3
x
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) FFO and Core FFO per share/unit were computed using weighted average shares and units outstanding, regardless of their dilutive impact. See page 4 for a detailed calculation.
 
 
 
 
 
 
 
 
 
 

SECOND QUARTER 2014
1
BALANCE SHEET

(Amount in thousands, except share and per share data)
June 30, 2014
 
December 31, 2013
 
 Assets
 
 (unaudited)
 
 
 
 
Collegiate housing properties, net (1)
 
$
1,307,519

 
$
1,388,885

 
 
Collegiate housing properties - held for sale, net (1)
 
21,166

 
—

 
 
Assets under development
 
233,441

 
116,787

 
 
Cash and cash equivalents
 
11,162

 
22,073

 
 
Restricted cash
 
14,069

 
12,253

 
 
Other assets
 
78,690

 
70,567

 
 Total assets
 
$
1,666,047

 
$
1,610,565

 
 
 
 
 
 
 
 Liabilities and equity
 
 
 
 
 
 Liabilities:
 
 
 
 
 
 
Mortgage and construction loans, net of unamortized premium
 
$
361,173

 
$
422,681

 
 
Unsecured revolving credit facility
 
66,000

 
356,900

 
 
Unsecured term loan
 
187,500

 
—

 
 
Accounts payable and accrued expenses
 
78,566

 
67,646

 
 
Deferred revenue
 
19,963

 
23,498

 
 Total liabilities
 
713,202

 
870,725

 
 
 
 
 
 
 
 
 Commitments and contingencies
—

 
—

 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
9,780

 
9,871

 
 
 
 
 
 
 
 
 Equity:
 
 
 
 
 
 EdR stockholders' equity:
 
 
 
 
 
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 139,437,355 and 114,740,155 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively
 
1,394

 
1,148

 
 
Preferred stock, $0.01 par value per share, 50,000,000 shares authorized, no shares issued and outstanding
 
—

 
—

 
 
Additional paid-in capital
 
1,027,816

 
813,540

 
 
Accumulated deficit
 
(85,706
)
 
(88,964
)
 
 
Accumulated other comprehensive loss
 
(3,757
)
 
—

 
 Total EdR stockholders' equity
939,747

 
725,724

 
 Noncontrolling interests
3,318

 
4,245

 
 Total equity
 
943,065

 
729,969

 
 
 
 
 
 
 
 
 Total liabilities and equity
 
$
1,666,047

 
$
1,610,565

 
 
 
 
 
 
 
 
(1) Amount is net of accumulated depreciation of $216,530 and $204,181 as of June 30, 2014 and December 31, 2013, respectively. Of this amount for June 30, 2014, $9,982 relates to collegiate housing properties held for sale.

SECOND QUARTER 2014
2
OPERATING RESULTS

(Amounts in thousands, except per share data, unaudited)
Three months ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
$ Change
 
2014
 
2013
 
$ Change
Revenues:
 
 
 
 
 
 
 
 
 
 
 
     Collegiate housing leasing revenue
$
46,309

 
$
37,335

 
$
8,974

 
$
97,020

 
$
76,788

 
$
20,232

     Third-party development services
757

 
759

 
(2
)
 
1,559

 
1,150

 
409

     Third-party management services
786

 
823

 
(37
)
 
1,804

 
1,792

 
12

     Operating expense reimbursements
2,188

 
2,121

 
67

 
4,202

 
5,979

 
(1,777
)
     Total revenues
50,040

 
41,038

 
9,002

 
104,585

 
85,709

 
18,876

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
     Collegiate housing leasing operations
20,975

 
17,812

 
3,163

 
43,143

 
35,531

 
7,612

     Development and management services
2,282

 
1,618

 
664

 
4,623

 
3,389

 
1,234

     General and administrative
1,677

 
1,942

 
(265
)
 
3,794

 
3,776

 
18

     Development pursuit, acquisition costs and severance
307

 
79

 
228

 
308

 
268

 
40

     Depreciation and amortization
14,458

 
11,562

 
2,896

 
28,241

 
22,161

 
6,080

     Ground lease expense
1,934

 
2,210

 
(276
)
 
3,833

 
3,798

 
35

     Loss on impairment of collegiate housing properties
9,870

 
—

 
9,870

 
11,780

 
—

 
11,780

     Reimbursable operating expenses
2,188

 
2,121

 
67

 
4,202

 
5,979

 
(1,777
)
     Total operating expenses
53,691

 
37,344

 
16,347

 
99,924

 
74,902

 
25,022

Operating income (loss)
(3,651
)
 
3,694

 
(7,345
)
 
4,661

 
10,807

 
(6,146
)
Nonoperating expenses:
 
 
 
 
 
 
 
 
 
 
 
     Interest expense
4,967

 
3,855

 
1,112

 
10,568

 
7,909

 
2,659

     Amortization of deferred financing costs
514

 
410

 
104

 
1,017

 
830

 
187

    Interest income
(41
)
 
(124
)
 
83

 
(111
)
 
(243
)
 
132

    Loss on extinguishment of debt
—

 
—

 
—

 
649

 
—

 
649

Total nonoperating expenses
5,440

 
4,141

 
1,299

 
12,123

 
8,496

 
3,627

Income (loss) before equity in earnings (losses) of unconsolidated entities, income taxes, discontinued operations and gain on sale of collegiate housing communities
(9,091
)
 
(447
)
 
(8,644
)
 
(7,462
)
 
2,311

 
(9,773
)
Equity in earnings (losses) of unconsolidated entities
(112
)
 
(22
)
 
(90
)
 
(134
)
 
(42
)
 
(92
)
Income (loss) before income taxes, discontinued operations, and gain on sale of collegiate housing properties
(9,203
)
 
(469
)
 
(8,734
)
 
(7,596
)
 
2,269

 
(9,865
)
Income tax benefit
(357
)
 
—

 
(357
)
 
(312
)
 
(237
)
 
(75
)
Income (loss) from continuing operations
(8,846
)
 
(469
)
 
(8,377
)
 
(7,284
)
 
2,506

 
(9,790
)
Income from discontinued operations
—

 
4,159

 
(4,159
)
 
—

 
4,662

 
(4,662
)
Income (loss) before gain on sale of collegiate housing communities
(8,846
)
 
3,690

 
(12,536
)
 
(7,284
)
 
7,168

 
(14,452
)
Gain on sale of collegiate housing communities
—

 
—

 
—

 
10,902

 
—

 
10,902

Net income (loss)
(8,846
)
 
3,690

 
(12,536
)
 
3,618

 
7,168

 
(3,550
)
Less: Net income (loss) attributable to the noncontrolling interests
(38
)
 
(142
)
 
104

 
360

 
27

 
333

Net income (loss) attributable to EdR
$
(8,808
)
 
$
3,832

 
$
(12,640
)
 
$
3,258

 
$
7,141

 
$
(3,883
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
Loss on cash flow hedging derivatives
(2,394
)
 
—

 
(2,394
)
 
(3,757
)
 
—

 
(3,757
)
Comprehensive income (loss)
$
(11,202
)
 
$
3,832

 
$
(15,034
)
 
$
(499
)
 
$
7,141

 
$
(7,640
)
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share information:
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to EdR common stockholders per share – basic and diluted
$
(0.08
)
 
$
0.03

 
$
(0.11
)
 
$
0.03

 
$
0.06

 
$
(0.03
)
Weighted average shares of common stock outstanding – basic
116,657

 
114,452

 

 
115,833

 
114,045

 
 
Weighted average shares of common stock outstanding – diluted
116,657

 
114,452

 
 
 
116,871

 
115,083

 
 

SECOND QUARTER 2014
3
FUNDS FROM OPERATIONS

(Amounts in thousands, except per share data, unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2014
 
2013
 
$ Change
 
2014
 
2013
 
$ Change
Net income (loss) attributable to EdR
$
(8,808
)
 
$
3,832

 
$
(12,640
)
 
$
3,258

 
$
7,141

 
$
(3,883
)
 
 
 
 
 
 


 
 
 
 
 
 
 
Gain on sale of collegiate housing assets (1)
—

 
(3,895
)
 
3,895

 
(10,902
)
 
(3,895
)
 
(7,007
)
 
Impairment losses
9,870

 
—

 
9,870

 
11,780

 
—

 
11,780

 
Real estate related depreciation and amortization
14,299

 
11,949

 
2,350

 
27,921

 
23,032

 
4,889

 
Equity portion of real estate depreciation and amortization on equity investees
50

 
48

 
2

 
99

 
96

 
3

 
Noncontrolling interests
(127
)
 
(98
)
 
(29
)
 
178

 
71

 
107

Funds from operations ("FFO")
15,284

 
11,836

 
3,448

 
32,334

 
26,445

 
5,889

 
 
 
 
 
 


 
 
 
 
 
 
FFO adjustments:
 
 
 
 


 
 
 
 
 
 
 
Loss on extinguishment of debt
—

 
—

 
—

 
649

 
—

 
649

 
Acquisition costs
22

 
72

 
(50
)
 
23

 
299

 
(276
)
 
Severance costs, net of tax
285

 
—

 
285

 
285

 
—

 
285

 
Straight-line adjustment for ground leases (2)
1,212

 
1,715

 
(503
)
 
2,425

 
2,807

 
(382
)
FFO adjustments:
1,519

 
1,787

 
(268
)
 
3,382

 
3,106

 
276

 
 
 
 
 
 


 
 
 
 
 
 
FFO on Participating Developments:(3)
 
 
 
 


 
 
 
 
 
 
 
Interest on loan to Participating Development
455

 
455

 
—

 
905

 
905

 
—

 
Development fees on Participating Development, net of costs and taxes
—

 
454

 
(454
)
 
—

 
454

 
(454
)
FFO on Participating Developments
455

 
909

 
(454
)
 
905

 
1,359

 
(454
)
 
 
 
 
 
 


 
 
 
 
 
 
Core funds from operations ("Core FFO")
$
17,258

 
$
14,532

 
$
2,726

 
$
36,621

 
$
30,910

 
$
5,711

 
 
 
 
 
 


 
 
 
 
 
 
FFO per weighted average share/unit (4)
$
0.13

 
$
0.10

 
$
0.03

 
$
0.28

 
$
0.23

 
$
0.05

Core FFO per weighted average share/unit (4)
$
0.15

 
$
0.13

 
$
0.02

 
$
0.31

 
$
0.27

 
$
0.04

 
 

 

 


 
 
 
 
 
 
Weighted average shares/units (4)
117,694

 
115,489

 
2,205

 
116,871

 
115,083

 
1,788

 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  The gain on sale of collegiate housing assets in 2013 is included in discontinued operations and the gain recognized in 2014 is included as gain on sale of collegiate housing communities on the Condensed Consolidated Statements of Comprehensive Income.
(2)  Represents the straight-line rent expense adjustment required by GAAP related to ground leases. As ground lease terms range from 40 to 99 years, the adjustment to straight-line these agreements becomes material to our operating results, distorting the economic results of the communities.
(3)  FFO on Participating Developments represents the economic impact of interest and fees not recognized in net income due to the Company having a participating investment in the third-party development. The adjustment for interest income is based on terms of the loan.
(4)  FFO and Core FFO per weighted average share/unit were computed using the weighted average of all shares and partnership units outstanding, regardless of their dilutive impact.

SECOND QUARTER 2014
4
COMMUNITY OPERATING RESULTS

(Amounts in thousands, unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Three months ended June 30,
 

Six months ended June 30,


2014
 
2013
 
$ Change
 
% Change
 

2014
 
2013
 
$ Change
 
% Change
Revenues

 

 

 

 


 

 
 
 
 

Same-communities
$
33,860

 
$
33,043

 
$
817

 
2.5
%
 

$
69,936

 
$
68,065

 
$
1,871

 
2.7
%

New-communities (1)
11,116

 
1,310

 
9,806

 
NM

 

22,887

 
2,829

 
20,058

 
NM

 
Other-communities (3)
1,333

 
2,982

 
(1,649
)
 
NM

 
 
4,197

 
5,894

 
(1,697
)
 
NM

Total revenues
46,309

 
37,335

 
8,974

 
24.0
%
 

97,020

 
76,788

 
20,232

 
26.3
%



 

 
 
 
 
 


 

 
 
 
 
Operating expenses (2)

 

 
 
 
 
 


 

 
 
 
 

Same-communities
15,147

 
14,798

 
349

 
2.4
%
 
 
30,408

 
29,303

 
1,105

 
3.8
%

New-communities (1)
5,008

 
1,351

 
3,657

 
NM

 
 
10,224

 
2,831

 
7,393

 
NM

 
Other-communities (3)
820

 
1,663

 
(843
)
 
NM

 
 
2,511

 
3,397

 
(886
)
 
NM

Total operating expenses
20,975

 
17,812

 
3,163

 
17.8
%
 
 
43,143

 
35,531

 
7,612

 
21.4
%



 

 
 
 
 
 


 

 
 
 
 
Net operating income

 

 
 
 
 
 


 

 
 
 
 

Same-communities
18,713

 
18,245

 
468

 
2.6
%
 

39,528

 
38,762

 
766

 
2.0
%

New-communities (1)
6,108

 
(41
)
 
6,149

 
NM

 

12,663

 
(2
)
 
12,665

 
NM

 
Other-communities (3)
513

 
1,319

 
(806
)
 
NM

 
 
1,686

 
2,497

 
(811
)
 
NM

Total net operating income
$
25,334

 
$
19,523

 
$
5,811

 
29.8
%
 

$
53,877

 
$
41,257

 
$
12,620

 
30.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) See page 18 of this supplement for a listing of which communities are categorized as same-communities and which are new-communities.
(2) Represents community level operating expenses, excluding management fees, depreciation, amortization, ground lease expense and impairment charges, plus regional and other corporate costs of supporting the communities.
(3) Effective January 1, 2014, the Trust adopted the new accounting guidance relating to the reporting of discontinued operations. It is anticipated that the Trust's one-off property dispositions will no longer qualify as discontinued operations. This category represents the operating results of communities sold prior to their disposition and the operating results of communities held for sale as of June 30, 2014.


SECOND QUARTER 2014
5
SAME-COMMUNITY EXPENSES BY CATEGORY

(Amounts in thousands, except bed and per-bed data)
 
 
Three months ended June 30, 2014
 
Three months ended June 30, 2013
 
 
 
 
 

Amount
Per Bed
% of Total Operating Expenses
 
Amount
Per Bed
 
$ Change
 
% Change
 
Utilities (1)
$
4,412

$
219

29
%
 
$
4,360

$
216

 
$
52

 
1.2
 %
 
On-Site Payroll
2,759

137

18
%
 
2,604

129

 
155

 
6.0
 %
 
General & Administrative (2)
2,526

125

17
%
 
2,532

126

 
(6
)
 
(0.2
)%
 
Maintenance & Repairs (3)
1,101

55

7
%
 
1,134

56

 
(33
)
 
(2.9
)%
 
Marketing
709

35

5
%
 
792

39

 
(83
)
 
(10.5
)%
 
Total Direct Operating Expenses
$
11,507

$
571

76
%
 
$
11,422

$
566

 
$
85

 
0.7
 %
 




 


 
 
 
 
 
Real Estate Taxes
3,190

158

21
%
 
2,899

144

 
291

 
10.0
 %
 
Insurance
450

22

3
%
 
477

24

 
(27
)
 
(5.7
)%
 
Total Fixed Operating Expenses
$
3,640

$
180

24
%
 
$
3,376

$
168

 
$
264

 
7.8
 %
 
Total Property Operating Expenses
$
15,147

$
751

100
%
 
$
14,798

$
734

 
$
349

 
2.4
 %
 


 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2014
 
Six months ended June 30, 2013
 
 
 
 
 
 
Amount
Per Bed
% of Total Operating Expenses
 
Amount
Per Bed
 
$ Change
 
% Change
 
Utilities (1)
$
9,125

$
452

30
%
 
$
8,754

434

 
$
371

 
4.2
 %
 
On-Site Payroll
5,509

273

18
%
 
5,312

263

 
197

 
3.7
 %
 
General & Administrative (2)
5,026

249

17
%
 
5,007

248

 
19

 
0.4
 %
 
Maintenance & Repairs (3)
2,006

99

7
%
 
2,078

103

 
(72
)
 
(3.5
)%
 
Marketing
1,588

79

5
%
 
1,639

81

 
(51
)
 
(3.1
)%
 
Total Direct Operating Expenses
$
23,254

$
1,152

76
%
 
$
22,790

$
1,129

 
$
464

 
2.0
 %
 
 



 


 

 

 
Real Estate Taxes
6,253

310

21
%
 
5,555

275

 
698

 
12.6
 %
 
Insurance
901

45

3
%
 
958

48

 
(57
)
 
(5.9
)%
 
Total Fixed Operating Expenses
$
7,154

$
355

24
%
 
$
6,513

$
323

 
$
641

 
9.8
 %
 
Total Property Operating Expenses
$
30,408

$
1,507

100
%
 
$
29,303

$
1,452

 
$
1,105

 
3.8
 %
 


 
 
 
 
 
 
 
 
 
 
Same-community beds
20,167

 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
(1) Represents gross costs before recoveries and includes student amenities such as internet.
 
(2) Includes property-level general and administrative cost, dining and retail costs as well as regional and other corporate costs of supporting the communities.
 
(3) Includes general maintenance costs, grounds and landscaping, turn costs and life safety costs.
 

SECOND QUARTER 2014
6
COMMUNITY STATISTICS


Three months ended June 30,

 
Six months ended June 30,

 

2014
2013

Change

 
2014
2013

Change

 






 





 
Occupancy






 






 
   Physical
87.6
%
87.3
%

30

bps
 
90.3
%
89.5
%

80

bps
 
   Economic
85.6
%
84.6
%

100

bps
 
88.8
%
87.4
%

140

bps
 




 

 



 

 
NarPAB
$
544

$
492


10.6
%

 
$
563

$
509


10.6
 %

 
Other income per avail. bed
$
43

$
40


7.5
%

 
$
39

$
40


(2.5
)%

 
RevPAB
$
587

$
532


10.3
%

 
$
602

$
549


9.7
 %

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expense per bed
$
266

$
254


4.7
%

 
$
268

$
254


5.5
 %

 




 

 



 

 
Operating margin
54.7
%
52.3
%

240

bps
 
55.5
%
53.7
%

180

bps
 




 

 



 

 
Design Beds
78,906

70,154


12.5
%

 
161,172

139,934


15.2
 %

 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTE: Operating statistics for the prior year exclude communities classified as discontinued operations. Effective January 1, 2014, the Trust adopted the new accounting guidance relating to the reporting of discontinued operations. It is anticipated that the Trust's one-off property dispositions will no longer quality as discontinued operations.


SECOND QUARTER 2014
7
SAME-COMMUNITY STATISTICS


Three Months Ended June 30,


Six Months Ended June 30,

 

2014
2013

Change


2014
2013

Change

 












 
Occupancy













 
   Physical
88.0
%
88.2
%

(20
)
bps

90.6
%
90.5
%

10

bps
 
   Economic
85.8
%
84.8
%

100

bps

89.3
%
87.8
%

150

bps
 




 






 

 
NarPAB
$
521

$
509


2.4
%


$
543

$
528


2.8
%

 
Other income per avail. bed
$
39

$
37


5.4
%


$
35

$
35


—
%

 
RevPAB
$
560

$
546


2.5
%


$
578

$
563


2.7
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expense per bed
$
251

$
245


2.4
%


$
251

$
242


3.8
%

 




 





 

 
Operating margin
55.2
%
55.2
%

—

bps

56.5
%
56.9
%

(40
)
bps
 




 





 

 
Design Beds (1)
60,501

60,501


—
%


121,002

121,002


—
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) In June 2013 we converted 64 historically double occupancy rooms at University Towers to single occupancy. This reduced design beds by 64 beds. In August, we reconfigured rooms at the Berk reducing design beds by 2. As these changes did not impact occupied beds they were made to the prior year design beds so that information between periods is comparable.
 


SECOND QUARTER 2014
8
PRELEASING SUMMARY

 


 

 

 
Preleasing at July 21,
 

 

 
 

Design Beds
 
% of NOI
 
2013 Opening Occupancy
 
2014

2013
 
Preleasing Ahead/(Behind)
 
Projected Rate Growth
 
 


 

 

 



 

 

 
 
Same-Communities - by Tier


 


 


 



 

 

 
 
     Prior Year Occupancy Below 90% (Tier 1)
3,597

 
12.5
%
 
81.7
%
 
82.6
%

66.3
%
 
16.3
 %
 
(0.6
)%
 
 
     Prior Year Occupancy 90% to 94.9% (Tier 2)
5,992

 
27.3
%
 
92.3
%
 
87.0
%

81.9
%
 
5.1
 %
 
1.1
 %
 
 
     Prior Year Occupancy 95% to 97.9% (Tier 3)
5,514

 
21.6
%
 
96.4
%
 
90.6
%

90.6
%
 
—
 %
 
2.5
 %
 
 
          Subtotal - Tiers 1 - 3
15,103

 
61.4
%
 
91.3
%
 
87.3
%

81.4
%
 
5.9
 %
 

 
 
Prior Year Occupancy 98% and Above (Tier 4)
7,755

 
38.6
%
 
99.8
%
 
97.9
%

98.8
%
 
(0.9
)%
 
3.1
 %
 
 
Total Same-Communities (1)
22,858

 
100.0
%
 
94.2
%
 
90.9
%

87.3
%
 
3.6
 %
 
2.0
 %
 
 
Total New-Communities (1)
6,006

 

 

 
94.7
%


 

 

 
 
Total Communities
28,864

 


 


 
91.7
%



 


 


 
 



 


 


 





 


 


 
 
Projected Fall Revenue:
 


 
 
Based on current leasing velocity shown above and individual market conditions, we are projecting fall revenue to be up 3% to 4%, including a 1% to 2% increase in occupancy and an approximate 2% growth in net rental rates.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The same-community designation for leasing purposes is different than for financial statement purposes. A community is considered same-community for leasing when the Company has managed the leasing process for at least two leasing cycles, including the Fall 2014 lease cycle. New-communities include existing new communities listed on page 18 that are not ticked (1) and all more than 50% owned developments delivering in 2014, including the presale at FIU.
 

SECOND QUARTER 2014
9
SAME-COMMUNITY PRELEASING BY REGION AND DISTANCE





 

 

 
Preleasing at July 21,
 


 



Design Beds
 
% of NOI
 
2013 Opening Occupancy
 
2014

2013
 
Preleasing Ahead/(Behind)
 
Projected Rate Growth



 


 


 





 


 


Same-Communities - by Region (1)


 


 


 





 


 


Mid-Atlantic
4,724

 
28.8
%
 
97.2
%
 
96.8
%

94.3
%
 
2.5
 %
 
1.7
 %
Midwest
2,636

 
8.9
%
 
92.2
%
 
83.6
%

83.0
%
 
0.6
 %
 
2.8
 %
North
2,547

 
10.4
%
 
97.0
%
 
95.4
%

90.4
%
 
5.0
 %
 
2.7
 %
South Central
4,094

 
21.7
%
 
97.0
%
 
95.5
%

92.9
%
 
2.6
 %
 
3.4
 %
Southeast
6,765

 
20.6
%
 
94.0
%
 
86.1
%

85.3
%
 
0.8
 %
 
1.5
 %
West
2,092

 
9.6
%
 
81.5
%
 
87.4
%

68.7
%
 
18.7
 %
 
(0.9
)%
Total Same-Communities
22,858

 
100.0
%
 
94.2
%
 
90.9
%

87.3
%
 
3.6
 %
 
2.0
 %



 


 


 





 


 



 
 
 
 
 
 
 
 
 
 
 
 
 
Same-Communities - by Distance from Campus


 


 


 





 


 


0-0.2 miles
13,127

 
66.6
%
 
93.8
%
 
92.3
%

87.5
%
 
4.8
 %
 
1.8
 %
0.21-0.49 miles
2,144

 
8.3
%
 
91.1
%
 
90.2
%

82.1
%
 
8.1
 %
 
(0.2
)%
0.5-0.99 miles
2,006

 
6.8
%
 
96.1
%
 
92.4
%

89.3
%
 
3.1
 %
 
3.5
 %
1.0-1.99 miles
4,466

 
15.2
%
 
95.5
%
 
85.4
%

87.3
%
 
(1.9
)%
 
3.1
 %
2.0 & > miles
1,115

 
3.1
%
 
96.2
%
 
95.2
%

91.0
%
 
4.2
 %
 
1.7
 %
Total Same-Communities
22,858

 
100.0
%
 
94.2
%
 
90.9
%

87.3
%
 
3.6
 %
 
2.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) See definition of regions on page 20.


SECOND QUARTER 2014
10
NEW SUPPLY AND ENROLLMENT - EdR MARKETS

New supply slowed 9% from 2014 to 2015


EdR Market and Revenue Growth
*Enrollment projection represents the 4-year enrollment CAGR through 2013 for our markets. The mid-point of previously provided fall leasing guidance was used for 2014 revenue growth projections.

SECOND QUARTER 2014
11
OWNED COMMUNITY PROJECTED 2015 NEW SUPPLY AND DEMAND INFORMATION

 
 
 
 
 
 
 
 
 
 
 
 
Owned Community Projected 2015 New Supply and Demand Information by Region
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Region (4)
Owned Beds (3)
 
Percentage of Owned Beds
 
EdR NOI % (1)
 
Enrollment Growth 3 Year CAGR - Universities Served
 
2015 New Supply %
 
Variance
West
3,227

 
10
%
 
12
%
 
1.9
%
 
0.3
%
 
1.6
 %
Mid Atlantic
6,201

 
19
%
 
25
%
 
0.8
%
 
2.6
%
 
(1.8
)%
North
3,707

 
11
%
 
10
%
 
0.3
%
 
1.8
%
 
(1.5
)%
South Central
9,342

 
29
%
 
33
%
 
2.0
%
 
2.4
%
 
(0.4
)%
Southeast
7,307

 
23
%
 
15
%
 
1.4
%
 
1.5
%
 
(0.1
)%
Midwest
2,636

 
8
%
 
6
%
 
2.2
%
 
4.3
%
 
(2.1
)%
     Total
32,420

 
100
%
 
101
%
 
1.4
%
 
1.8
%
 
(0.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Region (4)
Anticipated 2015 Enrollment Growth (2)
 
2015 Supply Growth
 
Variance
 
 
 
 
 
 
West
2,749

 
637

 
(2,112
)
 
 
 
 
 
 
Mid Atlantic
1,269

 
4,534

 
3,265

 
 
 
 
 
 
North
2,031

 
4,087

 
2,056

 
 
 
 
 
 
South Central
2,671

 
4,207

 
1,536

 
 
 
 
 
 
Southeast
3,208

 
4,082

 
874

 
 
 
 
 
 
Midwest
2,053

 
4,064

 
2,011

 
 
 
 
 
 
     Total
13,981

 
21,611

 
7,630

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTE: Schedule represents all markets served by EdR communities and includes all announced 2014 and 2015 developments. Data was obtained from the National Center for Education Statistics, Axiometrics and local market data.
 
(1) Includes 2014 and 2015 development deliveries, the planned acquisition of The District on Apache at Arizona State University and the presale at Florida International University (see page 14). NOI is based on current 2014 forecasted net operating income with annualization for 2014 developments and acquisitions and proforma NOI for 2015 developments.
(2) Extrapolated from 2013 enrollment statistics from Nation Center of Education Statistics using the previous 3-year enrollment growth percentage.
(3) Total Owned Beds reported herein include Total Communities design beds on page 9 of 28,864 plus 1,610 of beds related to the 2015 deliveries at the University of Kentucky, 390 beds for 2015 delivery at the University of Connecticut, 656 beds for 2015 delivery at the University of Louisville, and 900 beds related to the planned acquisition at Arizona State University in 2014 (see page 14).
(4) See definition of regions on page 20.

SECOND QUARTER 2014
12
OWNED COMMUNITY PROJECTED 2015 NEW SUPPLY AND
DEMAND INFORMATION


 
 
 
 
 
 
 
 
 
 
 
 
Projected 2015 New Supply Sorted by Percentage Increase
 
 
 
 
 
 
 
 
New Supply Growth
University Markets
EdR Bed Count
Pro Forma EdR NOI %(1)
0%
11
28%
8,428
26%
27%
0.1% to 1.0%
5
12%
2,661
8%
7%
1.0% - 3.0%
10
25%
11,249
35%
35%
3.0% - 5.0%
10
25%
7,254
22%
23%
> 5.0%
4
10%
2,828
9%
8%
     Total
40
100%
32,420
100%
100%
 
 
 
 
 
 
 
 
 
 
 
 
University Markets with > 5% Increase in 2015 New Supply

 
 
 
 


 
 
 
 
University
New Supply Increase
Pro Forma EdR NOI %
 
 
 
University of Louisville
8.4%
2.4%
 
 
 
Saint Louis University
7.3%
1.1%
 
 
 
University of Oklahoma
6.8%
1.1%
 
 
 
University of Mississippi
6.5%
3.3%
 
 
 
 
 
7.9%
 
 
 
 
 
 
 
 
 
NOTE: Schedule represents all markets served by EdR communities and includes all announced 2014 developments. Data was obtained from the National Center for Education Statistics, Axiometrics and local market data.
 
(1) Includes 2014 and 2015 development deliveries, the planned acquisition of The District on Apache at Arizona State University and the presale at Florida International University (see page 14). NOI is based on current 2014 forecasted net operating income with annualization for 2014 developments and acquisitions and proforma NOI for 2015 developments.


SECOND QUARTER 2014
13
OWNED DEVELOPMENT SUMMARY

(Amounts in thousands except bed counts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Active Projects
 
 
 
 
 
 
 
 
 
Project
Project Type
Bed Count
Estimated Start Date
Anticipated Completion Date
Total Project Development Cost
EdR's Ownership Percentage
EdR's Share of Development Cost
EdR's Share of Development Cost to be Funded
 
 
University of Colorado - The Lotus
Wholly Owned
195

In progress
Summer 2014
20,830

100
%
20,830

—

 
 
University of Kentucky - Haggin Hall
ONE Plan (1)
396

In progress
Summer 2014
23,802

100
%
23,802

3,835

 
 
University of Kentucky - Champions Court I
ONE Plan (1)
740

In progress
Summer 2014
45,924

100
%
45,924

2,759

 
 
University of Kentucky - Champions Court II
ONE Plan (1)
427

In progress
Summer 2014
23,808

100
%
23,808

1,022

 
 
University of Kentucky - Woodland Glen I & II
ONE Plan (1)
818

In progress
Summer 2014
44,491

100
%
44,491

4,022

 
 
University of Minnesota - The Marshall
Joint Venture (2)
994

In progress
Summer 2014
94,044

50
%
47,022

—

(2) 
 
Duke University - 605 West
Joint Venture
384

In progress
Summer 2014
46,133

90
%
41,520

4,725

 
 
University of Connecticut - The Oaks on the Square Ph III
Wholly Owned
116

In progress
Summer 2014
12,819

100
%
12,819

1,584

 
 
            Total - 2014 Deliveries
 
4,070

 
 
311,851

 
260,216

17,947

 
 
 
 
 
 
 
 
 
 
 
 
 
University of Kentucky - Woodland Glen III, IV & V
ONE Plan (1)
1,610

In progress
Summer 2015
101,172

100
%
101,172

67,648

 
 
University of Georgia - Georgia Heights
Joint Venture (2)
292

In progress
Summer 2015
55,615

50
%
27,808

4,665

(2) 
 
University of Connecticut - The Oaks on the Square Ph IV
Wholly Owned
390

In progress
Summer 2015
45,000

100
%
45,000

44,771

 
 
University of Louisville - The Retreat at Louisville
Joint Venture
656

In Progress
Summer 2015
45,000

75
%
33,750

33,750

 
 
            Total - 2015 Deliveries
 
2,948



246,787


207,730

150,834

 
 
 
 
 
 
 
 
 
 
 
 
 
University of Kentucky - Limestone Park I & II
ONE Plan (1)
1,141

In progress
Summer 2016
83,911

100
%
83,911

81,272

 
 
            Total - 2016 Deliveries
 
1,141

 
 
83,911

 
83,911

81,272

 
 
Total Active Projects
 
8,159

 
 
642,549

 
551,857

250,053

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-sale
 
 
 
 
 
 
 
 
 
Project
Project Type
Bed Count
Estimated Start Date
Anticipated Completion Date
Purchase Price
 
 
 
 
 
Florida International University - 109 Tower
Presale
542

In progress
Summer 2014
43,500

 
 
 
 
 
 
 

 
 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The On-Campus Equity Plan, or The ONE Plan SM, is our equity program for universities, which allows universities to use EdR's equity and financial stability to develop and revitalize campus housing while preserving their credit capacity for other campus projects. The ONE Plan SM offers one service provider and one equity source to universities seeking to modernize on-campus housing to meet the needs of today's students.
 
(2) These projects are not majority owned. As such, they will not be consolidated and we will recognize our portion of profits through equity in earnings on the income statement. Also as a result, the costs to be funded only represent EdR’s remaining required equity contribution.


SECOND QUARTER 2014
14
THIRD-PARTY DEVELOPMENT SUMMARY


(Amounts in thousands except bed counts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THIRD-PARTY PROJECTS
 
 
 
 
 
 
 
 
Project
Bed Count
Estimated Start Date
Anticipated Completion Date
Project Development Cost
Total Project Fees
Fees Earned Prior Year (1)
Fees Earned Six Months Ended June 30, 2014 (1)
Remaining Fees to Earn
West Chester University of Pennsylvania Phase II
653

In progress
Summer 2014
56,639

1,499

934

412

153

Wichita State University - Shocker Hall
784

In progress
Summer 2014
60,034

1,902

614

960

328

Clarion University of Pennsylvania
728

Spring 2014
Fall 2015
55,104

2,092

—

152

1,940

East Stroudsburg University - Pennsylvania Ph II
488

Spring 2015
Summer 2016
TBD

TBD

—

—

—

Total
2,653



171,777

5,493

1,548

1,524

2,421

 
NOTE: The initiation and completion of an awarded project that has not begun construction is contingent upon execution of transactional documents, including such items as development agreements and ground leases, and obtaining financing.
 
 
 
 
 
 
 
 
 
(1) Amount may not tie to third-party development services revenue on the statement of operations as this schedule only includes fees earned on projects that are in progress or recently completed.
 
 
 
 
 
 
 
 
 



SECOND QUARTER 2014
15
CAPITAL STRUCTURE

 
 
 
 
 
 
 
 
as of June 30, 2014
 
 
 
 
Principal Outstanding (5)
Weighted Average Interest Rate (5)
Average Term to Maturity (5)   (in years)
(dollars in thousands)
 
 
 
 
 
 
 
 
 
Total Debt to Gross Assets
 
 
 
 
     Debt (1)
$
612,773

 
 
Fixed Rate - Mortgage Debt (1)
$
225,097

5.6
%
2.8

     Gross Assets (2)
1,882,577

 
 
Variable Rate - Mortgage Debt
34,000

2.3
%
2.0

Debt to Gross Assets
32.5
%
 
 
Variable Rate - Construction Debt
100,176

2.3
%
1.1

 
 
 
 
Fixed Rate - 5 Yr. Unsecured Term Loan (5)
65,000

3.0
%
4.5

Net Debt to Enterprise Value
 
 
 
Fixed Rate - 7 Yr. Unsecured Term Loan (5)
122,500

4.0
%
6.5

     Net Debt (1)
$
601,611

 
 
Variable Rate - Unsecured Revolving Credit Facility
66,000

1.6
%
3.5

     Market Equity (3)
1,509,974

 
 
Debt (1) / Weighted Average
$
612,773

3.8
%
3.5

     Enterprise Value
$
2,111,585

 
 
Less Cash
11,162

 
 
 
 
 
 
Net Debt
$
601,611

 
 
Net Debt to Enterprise Value
28.5
%
 
 
 
 
 
 
 
 
 
 
Interest Coverage (TTM)
4.4
x
 
 
 
 
 
 
Net Debt to EBITDA - Adjusted (TTM) (4)
5.6
x
 
 
 
 
 
 
Variable Rate Debt to Total Debt
32.7
%
 
 
Debt Maturity Schedule (in millions)
 
 

 
 
Weighted Average Interest Rate of Debt Maturing Each Year (5)
 
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
2020
 
2021
Fixed Rate Mortgage Loans
 
4.9%
 
5.0%
 
5.5%
 
5.5%
 
—%
 
6.0%
 
5.7%
 
—%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
4.9%
 
2.5%
 
4.6%
 
5.0%
 
1.6%
 
4.4%
 
5.7%
 
4.0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Excludes unamortized debt premium of $1.9 million as of June 30, 2014.
(2)  Excludes accumulated depreciation of $216.5 million as of June 30, 2014 including $10.0 million related to held for sale assets.
(3)  Market equity includes 139,555,846 shares of the Company's common stock and 1,037,600 Operating Partnership units and is calculated using $10.74 per share, the closing price of the Company's common stock on June 30, 2014.
(4)  Net Debt to EBITDA - Adjusted is calculated to normalize the impact of non-producing construction debt. In the calculation, Net Debt is total debt less cash and excludes non-producing debt related to assets under development at time of calculation. EBITDA is Proforma Adjusted EBITDA, which includes 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.
(5) In connection with the term loans, the Trust entered into interest rate swaps to effectively fix the interest rate on the term loans. The weighted average interest rates reflect the swapped (fixed) rate plus the current margin.

SECOND QUARTER 2014
16
2014 GUIDANCE

Amounts in thousands, except share and per share data
 
Year ending December 31, 2014
(Unaudited)
 
Low End
 
High End
 
 
 
 
 
Net income attributable to EdR
 
$
28,135

 
$
31,999

 
 
 
 
 
Gain on sale of collegiate housing assets
 
(19,078)

 
(19,078)

Impairment losses
 
11,780

 
11,780

Real estate related depreciation and amortization
 
58,373

 
58,373

Equity portion of real estate depreciation and amortization on equity investees
 
198

 
198

Noncontrolling interests
 
513

 
513

FFO
 
$
79,921

 
$
83,785

FFO adjustments:
 
 
 
 
Loss on extinguishment of debt
 
649

 
649

Straight-line adjustment for ground leases (1)
 
4,835

 
4,835

Acquisition costs
 
23

 
23

Severance costs, net of tax
 
285

 
285

FFO adjustments
 
5,792

 
5,792

 
 
 
 
 
FFO on Participating Developments: (2)
 
 
 
 
Interest on loan to Participating Development
 
(5,582
)
 
(5,582
)
Development fees on Participating Development, net of costs and tax
 
(1,560
)
 
(1,560
)
FFO on Participating Developments
 
(7,142
)
 
(7,142
)
 
 
 
 
 
Core FFO
 
$
78,571

 
$
82,435

 
 
 
 
 
FFO per weighted average share/unit (3)
 
$
0.62

 
$
0.65

 
 
 
 
 
Core FFO per weighted average share/unit (3)
 
$
0.61

 
$
0.64

 
 
 
 
 
Weighted average shares/units (3)
 
128,805

 
128,805

 
 
 
 
 
(1) Represents the straight-line rent expense adjustment required by GAAP related to ground leases. As ground lease terms range from 40 to 99 years, the adjustment to straight-line these agreements becomes material to our operating results, distorting the economic results of the communities.
(2) FFO on participating developments represents the economic impact of interest and fees not recognized in net income due to the Company having a participating investment in the third-party development. The adjustment for development fees is recognized under the same percentage of completion method of accounting used for third-party development fees. The adjustment for interest income is based on terms of the loan.
(3) FFO and Core FFO per weighted average share/unit were computed using the weighted average of all shares and operating partnership units outstanding, regardless of their dilutive impact.

SECOND QUARTER 2014
17
COMMUNITY LISTING - OWNED

Name

Primary University Served

 Acquisition / Development Date

# of Beds

Name

Primary University Served

 Acquisition / Development Date

# of Beds
Players Club

Florida State University

Jan ’05

336

 
Irish Row

University of Notre Dame

Nov '11

326

The Commons

Florida State University

Jan ’05

732

 
GrandMarc at Westberry Place (ONE Plan)

Texas Christian University

Dec '11

562

University Towers

North Carolina State University

Jan ’05

889

 
The Reserve on Stinson

University of Oklahoma

Jan '12

612

The Reserve on Perkins

Oklahoma State University

Jan ’05

732

 
Campus West (ONE Plan) 

Syracuse University

Aug '12

313

The Pointe

Pennsylvania State University

Jan ’05

984

 
East Edge

University of Alabama

Aug '12

774

Commons on Kinnear

The Ohio State University

Jan ’05

502

 
The Province

East Carolina University

Sept '12

728

The Lofts

University of Central Florida

Jan ’05

730

 
The District on 5th

University of Arizona

Oct '12

764

The Reserve at Athens

University of Georgia

Jan ’05

612

 
Campus Village

Michigan State University

Oct '12

355

The Reserve at Columbia

University of Missouri

Jan ’05

676

 
The Province 

Kent State University

Nov '12

596

The Pointe at South Florida

University of South Florida

Jan ’05

1,002

 
The Suites at Overton Park 

Texas Tech University

Dec '12

465

Commons at Knoxville

University of Tennessee

Jan ’05

708

 
The Centre at Overton Park

Texas Tech University

Dec '12

400

Campus Creek

University of Mississippi

Feb ’05

636

 
 
 
 
 
 
 
 
Campus Lodge

University of Florida

Jun ’05

1,115

 
 
 
Total Same-Communities
 
 
 
20,167

Cape Trails

Southeast Missouri State University

Jan ’06

360

 
 
 
 
 
 
 
 
Carrollton Crossing

University of West Georgia

Jan ’06

336

 
The Lotus

University of Colorado, Boulder

Nov '11

40

River Pointe

University of West Georgia

Jan ’06

504

 
The Oaks on the Square (1)

University of Connecticut

Aug '12, Aug ' 13

503

The Avenue at Southern

Georgia Southern University

Jun ’06

624

 
3949 (1)

Saint Louis University

Aug '13

256

The Reserve at Saluki Pointe

Southern Illinois University

Aug '08, Aug '09

768

 
Central Hall I & II (ONE Plan)

University of Kentucky

Aug '13

601

University Village on Colvin (ONE Plan)

Syracuse University

Aug '09

432

 
2400 Nueces (ONE Plan) (1)

University of Texas at Austin

Aug '13

655

GrandMarc at The Corner

University of Virginia

Oct '10

641

 
Roosevelt Point (1)

Arizona State University - Downtown Phoenix

Aug '13

609

Wertland Square

University of Virginia

Mar ’11

152

 
The Retreat at Oxford (1)

University of Mississippi

Aug '13

668

Jefferson Commons

University of Virginia

Mar ’11

82

 
The Retreat at State College

Pennsylvania State University

Sept '13

587

The Berk

University of California, Berkeley

May ’11

165

 
The Cottages on Lindberg

Purdue University

Sept '13

745

University Village Towers

University of California, Riverside

Sept '11

554

 
The Varsity

University of Michigan

Dec '13

415

 
 
 
 
 
 
 
 
 
 
Total New-Communities
 
 
 
5,079

 
 
 
 
 
 
 
 
 
 
Total Owned-Communities
 
 
 
25,246

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The same-community designation for leasing purposes is different than for financial statement purposes. This community is considered same-community for purposes of leasing, as the Company has managed the leasing process for the 2013/2014 lease cycle and is managing the leasing process for the 2014/2015 lease cycle.

SECOND QUARTER 2014
18
INVESTOR RELATIONS

Executive Management

 
 

Randy Churchey
Chief Executive Officer
 
 

Tom Trubiana
Chief Investment Officer
 

Christine Richards
Chief Operating Officer
 
 

J. Drew Koester
Chief Accounting Officer
 
 



 
 
Corporate Headquarters
Investor Relations
 
 

EdR
     ICR, LLC
 
 

999 South Shady Grove Road, Suite 600
     Brad Cohen
 
 

Memphis, TN 38120
     (203) 682-8211
 
 

(901) 259-2500

 
 



 
 
Covering Analysts




Firm
Analyst
Contact #
Email

Bank of America - Merrill
Jana Galan
(646) 855-3081
jana.galan@baml.com

Green Street Advisors
Dave Bragg
(949) 706-8142
dbragg@greenstreetadvisors.com

Hilliard Lyons
Carol Kemple
(502) 588-1839
ckemple@hilliard.com

J.P. Morgan Securities Inc.
Anthony Paolone
(212) 622-6682
anthony.paolone@jpmorgan.com

KeyBanc Capital Markets
Karin A. Ford
(917) 368-2293
kford@keybanccm.com

MLV & Co., LLC
Ryan Meliker
(212) 542-5872
rmeliker@mlvco.com

Robert W. Baird & Co., Inc.
Paula Poskon
(571) 203-1677
pposkon@rwbaird.com

Sandler O'Neill + Partners, L.P.
Alex Goldfarb
(212) 466-7937
agoldfarb@sandleroneill.com

Stifel Nicolaus & Company Inc.
Rod Petrik
(443) 224-1306
rpetrik@stifel.com

UBS Securities
Ross Nussbaum
(212) 713-2484
ross.nussbaum@ubs.com

Wunderlich Securities
Craig Kucera
(540) 277-3366
ckucera@wundernet.com


SECOND QUARTER 2014
19
DEFINITIONS

 
Design beds
 
 
 
 

Represents the sum of the monthly design beds in the portfolio during the period.
 
 
 
 
 
 
 
Economic occupancy
 
 
 
 

Represents the effective occupancy calculated by taking net apartment rent accounted for on a GAAP basis for the respective period divided by potential rent for the respective period.
 
 
 
 
 
 
 
FFO
 
 
 
 

Funds from operations as defined by the National Association of Real Estate Investment Trusts.
 
 
 
 
 
 
 
GAAP
 
 
 
 

U.S. generally accepted accounting principles.
 
 
 
 
 
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 month included in the period reported.
 
 
 
 
 
Net debt to EBITDA - adjusted
 
 
 
 
Net debt to EBITDA - adjusted is calculated to normalize the impact of non-producing construction debt. In the calculation, net debt is total debt less cash and excludes non-producing debt related to assets under development at time of calculation. EBITDA is Pro Forma Adjusted EBITDA, which includes 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.
 
 
 
 
 
 
 
Operating expense per bed
 
 
 
 

Represents community-level operating expenses excluding management fees, depreciation and amortization.
 
 
 
 
 
Other income per available bed
 
 
 
 

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 misc.
 
 
 
 
 
 
 
Physical occupancy
 
 
 
 

Represents a weighted average of the month end occupancies for each month included in the period reported.
 
 
 
 
 
 
 
Regional Definitions
 
 
 
 
 
 Regions are defined as follows: Mid-Atlantic: North Carolina, Pennsylvania, Connecticut, New York, Virginia; Midwest: Oklahoma, Missouri, Kansas, Minnesota; North: Michigan, Ohio, Indiana, Illinois; South Central: Texas, Tennessee, Mississippi, Kentucky; Southeast: Florida, South Carolina, Alabama, Georgia; West: Arizona, California, Colorado
 
 
 
 
 
 
 
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 month included in the period reported.
 
 
 
 
 
 
 
Revenue per occupied bed (RevPOB)
 
 
 
 
 
Represents total revenue (net apartment rent plus other income) for the respective period divided by the sum of occupied beds in the portfolio for each month included in the period reported.
 
 
 
 
 
 
 
Same community
 
 
 
 

Includes communities that have been owned for more than a year as of the beginning of the current fiscal year.

SECOND QUARTER 2014
20
SAFE HARBOR



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,” which relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements are based on current expectations. You should not rely on our forward-looking statements because the matters that they describe are subject to known and unknown risks and uncertainties that could cause the Company’s business, financial condition, liquidity, results of operations, Core FFO, FFO and prospects to differ materially from those expressed or implied by such statements. Such risks are set forth under the captions “Risk Factors,” “Forward-Looking Statements” and "Management’s Discussion and Analysis of Financial Condition and Results of Operations” (or similar captions) in our most recent Annual Report on Form 10-K and 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, except as otherwise may be required by law, the Company undertakes no obligation to update publicly or revise any guidance or other forward-looking statement, whether as a result of new information, future developments, or otherwise except as required by law.


SECOND QUARTER 2014
21