MEMPHIS, Tenn.–(BUSINESS WIRE)–
Education Realty Trust Inc. (NYSE: EDR), a leader in the ownership,
development and management of collegiate housing, today announced
operating results for the quarter ended September 30, 2011.
Third Quarter Highlights
-
Core FFO per share/unit was $0.03, which was flat to the prior year on
improved community operating results offset by a 26% increase in
outstanding shares. Proceeds derived from the increased share count
were partially used to reduce overall leverage from 42% to 34% of
gross assets; -
Same-community net operating income for the quarter increased 2.1% on
a 5.6% increase in revenue and a real estate tax driven 7.5% increase
in operating expenses. Year to date same-community net operating
income increased 2.7%; -
Same-community opening occupancy for the 2011/2012 lease term improved
112 basis points over the prior year to 94.9%; -
Same-community net rental rates for the 2011/2012 lease term increased
4.6%; -
Closed on a new three-year, $175 million, senior unsecured credit
facility with an accordion feature expandable up to $315 million; and -
Acquired the 554-bed University Village Towers adjacent to the
University of California at Riverside for $38.1 million.
Randy Churchey, Education Realty Trust’s president and chief executive
officer, stated, “EDR was able to deliver solid third quarter results
while increasing its financial flexibility and positioning the Company
for sustained future growth. Collegiate enrollment continues to increase
and is expected to increase through 2019. We continue to evaluate
numerous opportunities to purchase or develop desirable assets at
reasonable pricing. Our consistent earnings performance over the last
six quarters along with our robust 2011/2012 leasing results highlight
EDR’s growing leadership in the collegiate housing industry and supports
our commitment to creating long-term value for our shareholders.”
Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders for the third quarter of
2011, was $6.5 million, or $0.09 per diluted share, compared to $39.8
million, or $0.69 per diluted share, for the same period in 2010.
Funds From Operations
Core FFO for the third quarter of 2011 was $2.4 million as compared to
$1.6 million in the prior year. Funds from operations (“FFO”) for the
third quarter of 2011 was $0.5 million compared to a loss of $32.6
million for the same period last year. FFO per share/unit for the third
quarter was $0.01 compared to ($0.55) in the third quarter of 2010. The
improvement in FFO was the result of impairment losses in the third
quarter of 2010, related to portfolio repositioning transactions in late
2010, and improved operating results from our same-community portfolio
and third-party development services in 2011.
A reconciliation of FFO and Core FFO to net income is included with the
financial tables accompanying this release.
Same-Community Results
Net operating income was $7.9 million for the third quarter of 2011, an
increase of 2.1%, or $0.2 million, from the prior year. This growth in
operating income was the result of a 5.0%, or $1.1 million, increase in
net apartment rent, an approximate 60 basis point increase from other
revenue and a 7.5%, or $1.1 million, increase in operating expenses.
The growth in revenue for the quarter was driven by a 1.2% increase in
occupancies, a 3.8% increase in net rental rates and a 0.6% improvement
from other revenue. Operating expenses grew 7.5% for the quarter mostly
due to the timing of direct expenditures between quarters and increases
in real estate taxes. The Company anticipates full year operating
expense growth of approximately 3.5% for 2011.
Year to date net apartment rent was up 3.6%, other revenue was up 0.1%,
operating expenses were up 4.7% and net operating income was up 2.7%
over the prior year.
Fall 2011 Opening Leasing
The same-community portfolio opened the 2011/2012 lease term 94.9%
occupied, a 112 basis point improvement over the prior lease term with a
4.6% increase in net rental rates.
The Company provides a property-by-property leasing schedule in its
quarterly earnings supplement located at http://www.snl.com/irweblinkx/yearlypresentations.aspx?iid=4095382
Investment Activity Third Quarter 2011
In September 2011, the Company completed the purchase of University
Village Towers, a 554-bed community adjacent to the University of
California at Riverside, for $38.1 million. The Company previously had a
10% equity interest in the community and was the manager. Built in 2005,
the community is adjacent to campus and opened the 2011/2012 lease-term
87% occupied, which is 10 percentage points ahead of the prior year
opening occupancy with net rental rates equal to last year. Based on the
current leasing results and other information, the purchase price
represents a 6.3% economic cap rate on expected next twelve months net
operating income. The university’s enrollment has grown more than 5% per
annum for each of the last three years and is expected to continue this
approximate pace in the near future due to its affordable tuition.
Capital Structure
In September 2011, the Company closed on a new three-year, $175 million,
senior unsecured credit facility. The new facility has an accordion
feature and is expandable up to $315 million. This new unsecured credit
facility both enhances the Company’s financial flexibility and provides
financing for future growth opportunities at advantageous rates.
At September 30, 2011, the Company had cash and cash equivalents
totaling $47.3 million and had nothing outstanding on its new revolving
credit facility. The Company’s debt to gross assets was 34.1%, its net
debt to EBITDA was 6.1x and its interest coverage ratio was 2.4x.
From June 30, 2011 through October 26th, the Company sold 5,377,687
shares of common stock under its ATM program. The shares were sold at a
weighted average share price of $9.08, raising net proceeds of $48.1
million.
Earnings Guidance and Outlook
Based upon management’s current estimates of market conditions and
future operating results, the Company reaffirms its previous guidance
for full year 2011 Core FFO per share/unit of $0.40 to $0.43. Consistent
with prior guidance, this outlook does not include the impact of any of
the following that have not already occurred and been announced by the
Company: investment of the $47.3 million of existing cash at September
30, 2011, dispositions, acquisitions, new third-party development or
management contracts, additional ONE Plan developments, capital
transactions or corporate restructuring costs.
Webcast and Conference Call
The company will host a conference call for investors and other
interested parties beginning at 5:00 p.m. Eastern Time on Thursday,
October 27, 2011. The call will be hosted by Randy Churchey, president
and chief executive officer, and Randy Brown, executive vice president
and chief financial officer.
The conference call will be accessible by telephone and the Internet. To
access the call, participants from within the U.S. may dial (888)
846-5003, and participants from outside the U.S. may dial (480)
629-9856. Participants may also access the call via live webcast by
visiting the company’s investor relations Web site at www.educationrealty.com.
The replay of the call will be available from approximately 7:00 p.m.
Eastern Time on October 27, 2011 through midnight Eastern Time on
November 10, 2011. To access the replay, the domestic dial-in number is
(800) 406-7325, the international dial-in number is (303) 590-3030, and
the passcode is 4478778. The archive of the webcast will be available on
the company’s Web site for a limited time.
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 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.
Non-GAAP Financial Measures
As defined by the National Association of Real Estate Investment Trusts,
FFO represents net income (loss) (computed in accordance with GAAP),
excluding gains (or losses) from sales of property, 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 it considers it to be an important
supplemental measure of the Company’s operating performance, assists in
the comparison of our 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 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 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, impairment losses 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.
About Education Realty Trust
Education Realty Trust Inc. (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 57 communities in 23 states with nearly 33,400 beds
within more than 10,600 units. For more information please visit the
company’s web site at www.educationrealty.com.
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
September 30, 2011
December 31, 2010
(unaudited)
Assets
Collegiate housing properties, net
$
701,310
$
652,603
Collegiate housing properties – held for sale
-
45,044
Assets under development
35,348
1,146
Cash and cash equivalents
47,342
6,958
Restricted cash
4,600
4,791
Other assets
37,133
26,138
Total assets
$
825,733
$
736,680
Liabilities and equity
Liabilities:
Mortgage and construction loans, net of unamortized premium/discount
$
335,864
$
367,631
Unsecured revolving line of credit
-
-
Secured revolving line of credit
-
3,700
Accounts payable and accrued expenses
27,406
18,324
Deferred revenue
14,783
12,243
Total liabilities
378,053
402,503
Commitments and contingencies
-
-
Redeemable noncontrolling interests
10,880
10,039
Equity:
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized,
76,120,789 and 58,657,056 shares issued and outstanding at
September 30, 2011 and December 31, 2010, respectively
762
587
Preferred shares, $0.01 par value, 50,000,000 shares authorized,
no shares issued and outstanding
-
-
Additional paid-in capital
531,967
414,850
Accumulated deficit
(95,929
)
(90,694
)
Total stockholders’ equity
436,800
324,743
Total liabilities and stockholders’ equity
$
825,733
$
736,680
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)
Unaudited
Three months ended September 30,
2011
2010
Revenues:
Collegiate housing leasing revenue
$
25,116
$
21,889
Third-party development services
1,132
334
Third-party management services
846
762
Operating expense reimbursements
2,503
7,152
Total revenues
29,597
30,137
Operating expenses:
Collegiate housing leasing operations
16,137
14,155
Development and management services
1,466
1,251
General and administrative
2,671
2,198
Severance, development pursuit and acquisition costs
108
(124
)
Depreciation and amortization
6,858
6,129
Ground leases
1,366
347
Reimbursable operating expenses
2,503
6,236
Total operating expenses
31,109
30,192
Operating income (loss)
(1,512
)
(55
)
Nonoperating expenses:
Interest expense
4,443
4,889
Amortization of deferred financing costs
362
284
Interest income
(37
)
(174
)
Total nonoperating expenses
4,768
4,999
Income (loss) before equity in income (losses) of unconsolidated
entities, income taxes and discontinued operations
(6,280
)
(5,054
)
Equity in earnings (losses) of unconsolidated entities
(390
)
(328
)
Income (loss) before income taxes and discontinued operations
(6,670
)
(5,382
)
Less: Income tax (benefit) expense
(60
)
(444
)
Income (loss) from continuing operations
(6,610
)
(5,826
)
Income (loss) from discontinued operations
53
(34,622
)
Net income (loss)
(6,557
)
(40,448
)
Less: Net income (loss) attributable to the noncontrolling interests
(91
)
(628
)
Net income (loss) attributable to Education Realty Trust, Inc.
$
(6,466
)
$
(39,820
)
Earnings per share information:
Net income (loss) attributable to Education Realty Trust, Inc.
common stockholders per share – basic diluted:
$
(0.09
)
$
(0.69
)
Weighted-average share of common stock outstanding – basic and
diluted
73,061
57,719
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)
Unaudited
Nine months ended September 30,
2011
2010
Revenues:
Collegiate housing leasing revenue
$
77,428
$
69,726
Third-party development services
3,481
1,675
Third-party management services
2,425
2,335
Operating expense reimbursements
6,376
11,017
Total revenues
89,710
84,753
Operating expenses:
Collegiate housing leasing operations
38,669
35,204
Development and management services
4,132
3,834
General and administrative
7,527
7,083
Severance, development pursuit and acquisition costs
259
744
Depreciation and amortization
20,704
17,977
Ground leases
4,097
512
Reimbursable operating expenses
6,376
10,101
Total operating expenses
81,764
75,455
Operating income (loss)
7,946
9,298
Nonoperating expenses:
Interest expense
13,827
14,764
Amortization of deferred financing costs
930
908
Interest income
(129
)
(401
)
Loss on extinguishment of debt
351
-
Total nonoperating expenses
14,979
15,271
Income (loss) before equity in earnings (losses) of unconsolidated
entities, income taxes and discontinued operations
(7,033
)
(5,973
)
Equity in earnings (losses) of unconsolidated entities
(408
)
(242
)
Income (loss) before income taxes and discontinued operations
(7,441
)
(6,215
)
Less: Income tax (benefit) expense
(278
)
267
Income (loss) from continuing operations
(7,163
)
(6,482
)
Income (loss) from discontinued operations
1,988
(34,187
)
Net income (loss)
(5,175
)
(40,669
)
Less: Net income (loss) attributable to the noncontrolling interests
60
(429
)
Net income (loss) attributable to Education Realty Trust, Inc.
$
(5,235
)
$
(40,240
)
Earnings per share information:
Net income (loss) attributable to Education Realty Trust, Inc.
common stockholders per share – basic diluted:
$
(0.07
)
$
(0.70
)
Weighted-average share of common stock outstanding – basic and
diluted
72,040
57,120
EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
CALCULATION OF FFO AND CORE FFO
(Amounts in thousands, except per share data)
Unaudited
Three months ended
September 30,
Nine months ended
September 30,
2011
2010
2011
2010
Net income (loss) attributable to Education Realty Trust, Inc.
$
(6,466
)
$
(39,820
)
$
(5,235
)
$
(40,240
)
Gain on sale of collegiate housing assets (4)
-
-
(2,388
)
-
Real estate related depreciation and amortization
6,693
7,593
20,797
22,276
Equity portion of real estate depreciation and amortization on
equity investees
107
120
329
368
Equity portion of loss on sale of student housing property on equity
investee
256
137
256
137
Noncontrolling interests
(91
)
(628
)
60
(429
)
Funds from operations (“FFO”)
$
499
$
(32,598
)
$
13,819
$
(17,888
)
FFO adjustments:
Loss on extinguishment of debt (4)
-
-
757
-
Acquisition costs
108
24
480
24
Straight-line adjustment for ground leases (3)
1,051
263
3,157
263
Loss on impairment
-
33,610
-
33,610
Reorganization/severance costs, net of tax
-
116
-
423
FFO adjustments
1,159
34,013
4,394
34,320
FFO on Participating Developments: (2)
Interest on loan to Participating Development
460
112
1,138
112
Development fees on Participating Development, net of costs and tax
244
23
763
23
FFO on Participating Developments
704
135
1,901
135
Core funds from operations (“Core FFO”)
$
2,362
$
1,550
$
20,114
$
16,567
FFO per weighted average share/unit (1)
$
0.01
$
(0.55
)
$
0.19
$
(0.31
)
Core FFO per weighted average share/unit (1)
$
0.03
$
0.03
$
0.27
$
0.28
Weighted average shares/units (1)
74,172
58,830
73,151
58,353
Notes:
(1)
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.
(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)
This represents the straight-line rent expense adjustment required
by GAAP related to ground leases at two communities. 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. For
the three and nine months ended September 30, 2011, the adjustment
includes $996 and $2,987 related to GrandMarc at the Corner at the
University of Virginia and $55 and $170 related to University
Village on Colvin in Syracuse, respectively.
(4)
All of or a portion of these amounts are included in discontinued
operations and are not visible on the face of our statement of
operations.
ICR, LLC
Brad Cohen, 203-682-8211
bcohen@icrinc.com
//
Article source: http://www.benzinga.com/pressreleases/11/10/b2074768/education-realty-trust-announces-third-quarter-2011-results