##### Table of Contents



UNITED
STATESSECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission File Number: 001-32417
 Education Realty Trust, Inc.
  Maryland
    
    20-1352180(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)530 Oak Court Drive, Suite 300, Memphis, Tennessee
    
    38117(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code): (901)259-2500
 þ o
  o o þ
 o þ




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##### Table of Contents



EDUCATION REALTY TRUST, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2006
TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    2Condensed Consolidated Balance Sheets of Education Realty Trust, Inc. and Subsidiaries as of
September 30, 2006 and December 31, 2005
    
    
    2Condensed Consolidated and Combined Statements of Operations of Education Realty Trust, Inc.
and Subsidiaries for the nine months ended September 30, 2006 and 2005 and for Education
Realty Trust Predecessor for the period January 1, 2005 through January 30, 2005
    
    
    3Condensed Consolidated Statements of Operations of Education Realty Trust, Inc. and
Subsidiaries for the three months ended September 30, 2006 and 2005
    
    
    4Condensed Consolidated and Combined Statements of Cash Flows of Education Realty Trust, Inc.
and Subsidiaries for the nine months ended September 30, 2006 and 2005 and for Education
Realty Trust Predecessor for the period January 1, 2005 through January 30, 2005
    
    
    5Notes to Condensed Consolidated and Combined Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II  OTHER INFORMATION
    
    
    34Item 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    34Signatures
    
    
    36EX-31.1 SECTION 302 CERTIFICATIONEX-31.2 SECTION 302 CERTIFICAITONEX-32.1 SECTION 906 CERTIFICATIONEX-32.2 SECTION 906 CERTIFICATION




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Financial Statements.
 EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  September 30, 2006
    
    
    December 31, 2005(Unaudited)AssetsStudent housing properties, net
    
    $
    812,075
    
    
    $
    620,305Corporate office furniture, net
    
    
    814
    
    
    
    991Cash and cash equivalents
    
    
    3,900
    
    
    
    61,662Restricted cash
    
    
    11,707
    
    
    
    6,738Student contracts receivable, net
    
    
    245
    
    
    
    470Receivable from affiliate
    
    
    260
    
    
    
    Management fee receivable from third party
    
    
    720
    
    
    
    552Goodwill and other intangibles, net
    
    
    3,693
    
    
    
    3,546Other assets
    
    
    8,556
    
    
    
    9,785Total assets
    
    $
    841,970
    
    
    $
    704,049Liabilities and stockholders equityLiabilities:Mortgage loans, net of unamortized premium/discount
    
    $
    425,180
    
    
    $
    328,335Other long term debt
    
    
    50,000
    
    
    
    Line of credit and other short term debt
    
    
    20,800
    
    
    
    Accounts payable and accrued expenses
    
    
    12,987
    
    
    
    9,370Accounts payable affiliate
    
    
    
    
    
    
    225Deferred revenue
    
    
    10,453
    
    
    
    7,660Total liabilities
    
    
    519,420
    
    
    
    345,590Minority interest
    
    
    19,367
    
    
    
    27,926Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, $.01 par value, 200,000,000 shares authorized, 26,395,939 and 26,263,889 shares
issued and outstanding as of September 30, 2006 and December 31, 2005, respectively
    
    
    264
    
    
    
    263Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    329,800
    
    
    
    351,664Loan to unitholder
    
    
    
    
    
    
    (5,996
    )Warrants
    
    
    375
    
    
    
    375Accumulated deficit
    
    
    (27,256
    )
    
    
    (15,773
    )Total stockholders equity
    
    
    303,183
    
    
    
    330,533Total liabilities and stockholders equity
    
    $
    841,970
    
    
    $
    704,049
 See accompanying notes to the condensed consolidated and combined financial statements
 2




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##### Table of Contents



EDUCATION REALTY TRUST, INC. AND
SUBSIDIARIES AND EDUCATION REALTY TRUST PREDECESSOR
 
 CONDENSED CONSOLIDATED
AND COMBINED STATEMENTS OF OPERATIONS
  Education Realty Trust, Inc.
    
    
    EDR PredecessorConsolidated
    
    
    CombinedNine months ended
    
    
    Nine months ended
    
    
    January 1 throughSeptember 30,
    
    
    September 30,
    
    
    January 30,2006
    
    
    2005
    
    
    2005(Unaudited)
    
    
    (Unaudited)Revenues:Student housing leasing revenue
    
    $
    63,421
    
    
    $
    51,329
    
    
    $
    1,503Student housing food service revenue
    
    
    2,670
    
    
    
    2,334
    
    
    
    269Other leasing revenue
    
    
    10,577
    
    
    
    
    
    
    
    Third-party development services
    
    
    2,283
    
    
    
    973
    
    
    
    Third-party management services
    
    
    2,051
    
    
    
    1,155
    
    
    
    103Operating expense reimbursements
    
    
    5,891
    
    
    
    3,538
    
    
    
    671Total revenues
    
    
    86,893
    
    
    
    59,329
    
    
    
    2,546Operating expenses:Student housing leasing operations
    
    
    32,159
    
    
    
    26,782
    
    
    
    524Student housing food service operations
    
    
    2,427
    
    
    
    2,194
    
    
    
    255General and administrative
    
    
    9,037
    
    
    
    10,138
    
    
    
    367Depreciation and amortization
    
    
    27,445
    
    
    
    23,387
    
    
    
    260Reimbursable operating expenses
    
    
    5,891
    
    
    
    3,538
    
    
    
    671Total operating expenses
    
    
    76,959
    
    
    
    66,039
    
    
    
    2,077Operating income (loss)
    
    
    9,934
    
    
    
    (6,710
    )
    
    
    469Nonoperating expenses:Interest expense
    
    
    21,682
    
    
    
    11,587
    
    
    
    479Exit fees on early repayment of mortgages
    
    
    
    
    
    
    1,084
    
    
    
    Amortization of deferred financing costs
    
    
    834
    
    
    
    582
    
    
    
    Interest income
    
    
    (439
    )
    
    
    (630
    )
    
    
    Total nonoperating expenses
    
    
    22,077
    
    
    
    12,623
    
    
    
    479Loss before equity in earnings of unconsolidated entities,
income taxes and minority interest
    
    
    (12,143
    )
    
    
    (19,333
    )
    
    
    (10
    )Equity in earnings of unconsolidated entities
    
    
    573
    
    
    
    560
    
    
    
    27Income (loss) before income taxes and minority interest
    
    
    (11,570
    )
    
    
    (18,773
    )
    
    
    17Income tax expense
    
    
    463
    
    
    
    170
    
    
    
    Net income (loss) before minority interest
    
    
    (12,033
    )
    
    
    (18,943
    )
    
    
    17Minority interest
    
    
    (550
    )
    
    
    (1,384
    )
    
    
    Net income (loss)
    
    $
    (11,483
    )
    
    $
    (17,559
    )
    
    $
    17Earnings per share information:Loss per share  basic and diluted
    
    $
    (0.44
    )
    
    $
    (0.80
    )Weighted average common shares outstanding- basic and diluted
    
    
    26,336,343
    
    
    
    21,883,589Distributions per common share
    
    $
    .8925
    
    
    $
    .4875
 See accompanying notes to the condensed consolidated and combined financial statements.
 3




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EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Three months ended
    
    
    Three months endedSeptember 30, 2006
    
    
    September 30, 2005Revenues:Student housing leasing revenue
    
    $
    19,520
    
    
    $
    20,145Student housing food service revenue
    
    
    895
    
    
    
    893Other leasing revenue
    
    
    3,709
    
    
    
    Third-party development services
    
    
    856
    
    
    
    791Third-party management services
    
    
    653
    
    
    
    511Operating expense reimbursements
    
    
    2,146
    
    
    
    1,474Total revenues
    
    
    27,779
    
    
    
    23,814Operating expenses:Student housing leasing operations
    
    
    13,422
    
    
    
    13,570Student housing food service operations
    
    
    844
    
    
    
    878General and administrative
    
    
    2,872
    
    
    
    2,561Depreciation and amortization
    
    
    9,205
    
    
    
    8,236Reimbursable operating expenses
    
    
    2,146
    
    
    
    1,474Total operating expenses
    
    
    28,489
    
    
    
    26,719Operating loss
    
    
    (710
    )
    
    
    (2,905
    )Nonoperating expenses:Interest expense
    
    
    7,551
    
    
    
    4,782Amortization of deferred financing costs
    
    
    281
    
    
    
    252Interest income
    
    
    (101
    )
    
    
    (146
    )Total nonoperating expenses
    
    
    7,731
    
    
    
    4,888Loss before equity in earnings of unconsolidated entities,
income taxes and minority interest
    
    
    (8,441
    )
    
    
    (7,793
    )Equity in earnings of unconsolidated entities
    
    
    148
    
    
    
    332Loss before income taxes and minority interest
    
    
    (8,293
    )
    
    
    (7,461
    )Income tax expense
    
    
    381
    
    
    
    340Net loss before minority interest
    
    
    (8,674
    )
    
    
    (7,801
    )Minority interest
    
    
    (485
    )
    
    
    (617
    )Net loss
    
    $
    (8,189
    )
    
    $
    (7,184
    )Earnings per share information:Loss per share  basic and diluted
    
    $
    (0.31
    )
    
    $
    (0.33
    )Weighted average common shares outstanding- basic and diluted
    
    
    26,390,417
    
    
    
    21,923,244Distributions per common share
    
    $
    .2975
    
    
    $
    .2975
 See
accompanying notes to the condensed consolidated and combined financial statements.
 4




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EDUCATION REALTY TRUST, INC. AND
SUBSIDIARIES AND EDUCATION REALTY TRUST PREDECESSOR
 
 CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
  Education Realty Trust, Inc.
    
    
    EDR PredecessorConsolidated
    
    
    CombinedNine months
    
    
    Nine months
    
    
    January 1ended
    
    
    ended
    
    
    throughSeptember 30,
    
    
    September 30,
    
    
    January 30,2006
    
    
    2005
    
    
    2005(Unaudited)
    
    (Unaudited)Operating activities:Net income (loss)
    
    $
    (11,483
    )
    
    $
    (17,559
    )
    
    $
    17Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    27,445
    
    
    
    23,387
    
    
    
    246Deferred tax expense
    
    
    249
    
    
    
    
    
    
    
    (Gain) loss on disposal of assets
    
    
    (10
    )
    
    
    424
    
    
    
    Amortization of deferred financing costs
    
    
    834
    
    
    
    582
    
    
    
    14Amortization of unamortized debt premiums/discounts
    
    
    (413
    )
    
    
    (213
    )
    
    
    Distributions from unconsolidated entities
    
    
    658
    
    
    
    740
    
    
    
    Noncash compensation expense related to PIUs and restricted stock
    
    
    622
    
    
    
    4,631
    
    
    
    Equity in earnings of unconsolidated entities
    
    
    (573
    )
    
    
    (560
    )
    
    
    (27
    )Minority interest
    
    
    (550
    )
    
    
    (1,384
    )
    
    
    Change in operating assets and liabilities (net of acquisitions)
    
    
    3,001
    
    
    
    4,951
    
    
    
    (92
    )Net cash provided by operating activities
    
    
    19,780
    
    
    
    14,999
    
    
    
    158Investing activities:Property acquisitions, net of cash acquired
    
    
    (112,694
    )
    
    
    (187,360
    )
    
    
    (25
    )Deferred acquisition costs and earnest money deposits
    
    
    (468
    )
    
    
    (4,283
    )
    
    
    Purchase of corporate furniture and fixtures
    
    
    (63
    )
    
    
    (1,058
    )
    
    
    Restricted cash
    
    
    (2,593
    )
    
    
    (3,073
    )
    
    
    (2,348
    )Insurance proceeds on property loss
    
    
    184
    
    
    
    175
    
    
    
    Investment in student housing properties
    
    
    (3,669
    )
    
    
    (4,077
    )
    
    
    Investment in joint ventures
    
    
    (1,021
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (120,324
    )
    
    
    (199,676
    )
    
    
    (2,373
    )Financing activities:Payment of mortgage notes
    
    
    (1,402
    )
    
    
    (115,419
    )
    
    
    (98
    )Borrowings of other long-term debt
    
    
    50,000
    
    
    
    
    
    
    
    Debt issuance costs
    
    
    (1,350
    )
    
    
    (3,155
    )
    
    
    Borrowing/repayment of line of credit, net
    
    
    20,800
    
    
    
    1,498
    
    
    
    Loan to unitholder
    
    
    
    
    
    
    (5,996
    )
    
    
    Proceeds from offering
    
    
    
    
    
    
    419,600
    
    
    
    Payment of offering costs
    
    
    (125
    )
    
    
    (26,963
    )
    
    
    Dividends and distributions paid
    
    
    (25,133
    )
    
    
    (11,721
    )
    
    
    Repayment of notes payable affiliate
    
    
    
    
    
    
    (485
    )
    
    
    Redemption of minority interest
    
    
    (8
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    42,782
    
    
    
    257,359
    
    
    
    (98
    )Net increase (decrease) in cash and cash equivalents
    
    
    (57,762
    )
    
    
    72,682
    
    
    
    (2,313
    )Cash and cash equivalents, beginning of period
    
    
    61,662
    
    
    
    1
    
    
    
    2,883Cash and cash equivalents, end of period
    
    $
    3,900
    
    
    $
    72,683
    
    
    $
    570Supplemental disclosure of cash flow information:Interest paid
    
    $
    21,501
    
    
    $
    11,726
    
    
    $
    471Income taxes paid
    
    $
    855
    
    
    $
    133
    
    
    $
    Supplemental disclosure of noncash activities:Prepaid offering costs charged against equity
    
    $
    
    
    
    $
    2,218
    
    
    $
    Prepaid acquisition costs
    
    
    4,718
    
    
    
    
    
    
    
    Units issued in connection with acquisitions
    
    
    
    
    
    
    26,340
    
    
    
    Warrants issued
    
    
    
    
    
    
    375
    
    
    
    Debt assumed in property acquisitions net of premium
    
    
    
    
    
    
    444,955
    
    
    
    Redemption of minority interest to satisfy loan to unitholder
    
    
    6,116
    
    
    
    
    
    
    
    
 See accompanying notes to the condensed consolidated and combined financial statements
 5




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EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES AND
EDUCATION REALTY TRUST PREDECESSOR
 
 NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
   1. Organization and description of business
   
    
    Allen & OHara Education Services, LLC (AOES), a Tennessee limited
liability company performing student housing management activities.
    
    Allen & OHara Development Company, LLC (AODC), a limited liability
company and formerly a wholly owned subsidiary of AOES, providing
development consulting services for third party student housing
properties.
    
    Allen & OHara Educational Properties LLC, a limited liability
company, previously holding the ownership interests in the student
housing property referred to as The Gables Apartments (The Gables).
    
    Education Properties Trust, LLC (EPT), a Delaware limited liability
company, owned and managed the following four garden-style student
housing properties through four separate wholly-owned limited
liability companies:
 
    
    Players Club Apartments, Tallahassee, Florida
    
    The Reserve at Athens, Athens, Georgia
    
    The Reserve at Clemson, Clemson, South Carolina
    
    NorthPointe Apartments, Tucson, Arizona
 
    
    C Station, LLC, a Tennessee limited liability company, owned and
operated one garden-style student housing property referred to as
College Station.
    
    University Towers Raleigh, LLC, a North Carolina limited liability
company, owned a student housing property referred to as University
Towers.
    6




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2. The offering, the formation transactions and the private placement
    3. Summary of significant accounting policies
 Basis of presentation and principles of consolidation and combination
     Reclassifications
  Interim financial information
  7




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Use of estimates
  Cash and cash equivalents
  Restricted cash
  Distributions
  Student housing properties
  Business
Combinations
 Accounting for the Impairment and Disposal of Long-lived Assets.
 Investment in unconsolidated joint ventures and limited liability companies
  Deferred financing costs
  Offering and Private Placement costs
  8




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Debt premiums/discounts
  Income taxes
   Earnings per share
 Earnings Per Share.
 Operating Partnership units
    
    
    914University Towers Operating Partnership units
    
    
    270Restricted Stock (unvested shares)
    
    
    120Profits Interest Units
    
    
    260Total potentially dilutive securities
    
    
    1,564
  Goodwill and other intangible assets
 Goodwill
and Other Intangible Assets
 Minority interests
  Revenue recognition
  Student housing leasing revenue
 9




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Student housing food service revenue
 Other leasing revenue
 Third-party development consulting services revenue
 Third-party management revenue
 Operating expense reimbursement revenue Income Statement Characterization of Reimbursements
Received for Out of Pocket Expenses Incurred.
 Recent accounting pronouncements
 Exchange of Nonmonetary Assets, Accounting for Nonmonetary Transactions
 Share-Based Payment Accounting for Stock-Based
Compensation, Accounting for Stock Issued to Employees.
 Determining Whether a General Partner, or the
General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited
Partners Have Certain Rights
 10




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Accounting for Conditional Asset
Retirement Obligations-an interpretation of FASB Statement No. 143 Accounting for Asset Retirement Obligations,
 Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109
  Fair Value Measurements.
 4. Investments in unconsolidated entities
  
    
    Salisbury Student Apartment Developers Joint Venture, 33% owned by AOES
    
    Salisbury Student Apartment Developers LLC, a Maryland limited liability company, 33% owned by the Promoter
    
    University of Louisville Apartment Developers LLC, a Kentucky limited liability company, 50% owned by the Promoter
    
    Hines/AOES LLC, an Alabama limited liability company, 50% owned by AOES
    
    National Development/Allen & OHara CUPA, LLC, a Pennsylvania limited liability company, 50% owned by Allen &
OHara Development Company, LLC (AODC)
    
    National Development/Allen & OHara Lock Haven, LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    National Development/Allen & OHara Clarion, LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    Allen & OHara National Development Bloomsburg LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    Allen & OHara / Academic Privatization LLC, a Tennessee limited liability company, 50% owned by AODC
 11




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##### Table of Contents




    
    University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by EDR Greensboro
    
    AODC/CPA, LLC, a Delaware limited liability company, 50% owned by AODC
   2006
    
    
    2005Results of Operations:Revenues
    
    $
    1,418
    
    
    $
    1,230Net income
    
    
    1,104
    
    
    
    1,197Equity in earnings of unconsolidated entities
    
    $
    573
    
    
    $
    587
 5. Debt
 Notes payable and credit facility
         12




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Mortgage debt
    Fiscal Year Ending2006 (3 months ended December 31, 2006)
    
    $
    1,1012007
    
    
    60,1582008
    
    
    26,4812009
    
    
    285,0492010
    
    
    8882011
    
    
    947Thereafter
    
    
    48,102Total
    
    
    422,726Unamortized debt premium
    
    
    2,454Outstanding at September 30, 2006, net of unamortized premium
    
    $
    425,180
  13




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6. Segments
  Nine months ended September 30, 2006
    
    
    Nine months ended September 30, 2005(1)Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    63,421
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    63,421
    
    
    $
    52,832
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,832Student housing
food service
revenue
    
    
    2,670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,670
    
    
    
    2,603
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,603Other leasing
revenue
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-party
development
consulting services
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    973
    
    
    
    
    
    
    
    
    
    
    
    973Third-party
management revenue
    
    
    
    
    
    
    
    
    
    
    2,051
    
    
    
    
    
    
    
    2,051
    
    
    
    
    
    
    
    
    
    
    
    1,258
    
    
    
    
    
    
    
    1,258Intersegment
revenues
    
    
    
    
    
    
    
    
    
    
    2,657
    
    
    
    (2,657
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,862
    
    
    
    (1,862
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    4,209Total revenues
    
    
    76,668
    
    
    
    2,283
    
    
    
    4,708
    
    
    
    3,234
    
    
    
    86,893
    
    
    
    55,435
    
    
    
    973
    
    
    
    3,120
    
    
    
    2,347
    
    
    
    61,875Operating Expenses:Student housing
leasing operations
    
    
    32,159
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,159
    
    
    
    27,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,306Student housing
food service
operations
    
    
    2,427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,427
    
    
    
    2,449
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,449General and
administrative
    
    
    
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    
    
    
    
    5,254
    
    
    
    
    
    
    
    1,413
    
    
    
    3,055
    
    
    
    
    
    
    
    4,468Intersegment
expenses
    
    
    2,657
    
    
    
    
    
    
    
    
    
    
    
    (2,657
    )
    
    
    
    
    
    
    1,862
    
    
    
    
    
    
    
    
    
    
    
    (1,862
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    4,209Total operating
expenses
    
    
    37,243
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    3,234
    
    
    
    45,731
    
    
    
    31,617
    
    
    
    1,413
    
    
    
    3,055
    
    
    
    2,347
    
    
    
    38,432Net operating
income (loss)
    
    
    39,425
    
    
    
    682
    
    
    
    1,055
    
    
    
    
    
    
    
    41,162
    
    
    
    23,818
    
    
    
    (440
    )
    
    
    65
    
    
    
    
    
    
    
    23,443Nonoperating
expenses(2)
    
    
    48,751
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    48,735
    
    
    
    36,574
    
    
    
    (6
    )
    
    
    (9
    )
    
    
    
    
    
    
    36,559Income (loss)
before equity in
earnings of
unconsolidated
entities, income
taxes and minority
interest
    
    
    (9,326
    )
    
    
    698
    
    
    
    1,055
    
    
    
    
    
    
    
    (7,573
    )
    
    
    (12,756
    )
    
    
    (434
    )
    
    
    74
    
    
    
    
    
    
    
    (13,116
    )Equity in earnings
of unconsolidated
entities
    
    
    (14
    )
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    573
    
    
    
    
    
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    587Income (loss)
before taxes and
minority
interest(4)
    
    $
    (9,340
    )
    
    $
    1,285
    
    
    $
    1,055
    
    
    $
    
    
    
    $
    (7,000
    )
    
    $
    (12,756
    )
    
    $
    153
    
    
    $
    74
    
    
    $
    
    
    
    $
    (12,529
    )Total segment
assets (3)
    
    $
    830,263
    
    
    $
    2,256
    
    
    $
    5,220
    
    
    $
    
    
    
    $
    837,739
    
    
    $
    641,612
    
    
    $
    1,300
    
    
    $
    5,445
    
    
    $
    
    
    
    $
    648,357
 (1)
    
    The segment information presented for the nine months ended
September 30, 2005 represents the combined results of operations
for Education Realty Trust, Inc. (post Offering) and the EDR
Predecessor (pre Offering).(2)
    
    Nonoperating expenses include interest expense, interest income
and exit fees on early payment of debt, amortization of deferred
financing costs, depreciation, and amortization of intangibles.(3)
    
    Significant increases in segment assets related to student housing
leasing from that presented at December 31, 2005 include the
acquisition of the Place Portfolio as described in Note 2 and Note
8 and the acquisition of Statesboro as discussed in Note 8.(4)
    
    The following is a reconciliation of the reportable segments net
loss before income taxes and minority interest to the
Trusts consolidated net loss before income taxes and
minority interest:
 2006
    
    
    2005Net loss before income taxes and minority interest for reportable segments
    
    $
    (7,000
    )
    
    $
    (12,529
    )Unallocated corporate amounts:Noncash compensation charge for PIUs and restricted stock
    
    
    (591
    )
    
    
    (4,631
    )Other corporate expenses
    
    
    (3,979
    )
    
    
    (1,596
    )Net loss before income taxes and minority interest
    
    $
    (11,570
    )
    
    $
    (18,756
    )
 14




---



##### Table of Contents



Three months ended September 30, 2006
    
    
    Three months ended September 30, 2005Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    19,520
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,520
    
    
    $
    20,145
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,145Student housing
food service
revenue
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895
    
    
    
    893
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    893Other leasing
revenue
    
    
    3,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-party
development
consulting services
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    791
    
    
    
    
    
    
    
    
    
    
    
    791Third-party
management revenue
    
    
    
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    
    
    
    
    511
    
    
    
    
    
    
    
    511Intersegment
revenues
    
    
    
    
    
    
    
    
    
    
    874
    
    
    
    (874
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    809
    
    
    
    (809
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,474
    
    
    
    1,474Total revenues
    
    
    24,124
    
    
    
    856
    
    
    
    1,527
    
    
    
    1,272
    
    
    
    27,779
    
    
    
    21,038
    
    
    
    791
    
    
    
    1,320
    
    
    
    665
    
    
    
    23,814Operating Expenses:Student housing
leasing operations
    
    
    13,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,422
    
    
    
    13,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,570Student housing
food service
operations
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    878General and
administrative
    
    
    
    
    
    
    616
    
    
    
    1,382
    
    
    
    
    
    
    
    1,998
    
    
    
    
    
    
    
    693
    
    
    
    1,573
    
    
    
    
    
    
    
    2,266Intersegment
expenses
    
    
    874
    
    
    
    
    
    
    
    
    
    
    
    (874
    )
    
    
    
    
    
    
    809
    
    
    
    
    
    
    
    
    
    
    
    (809
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,474
    
    
    
    1,474Total operating
expenses
    
    
    15,140
    
    
    
    616
    
    
    
    1,382
    
    
    
    1,272
    
    
    
    18,410
    
    
    
    15,257
    
    
    
    693
    
    
    
    1,573
    
    
    
    665
    
    
    
    18,188Net operating
income (loss)
    
    
    8,984
    
    
    
    240
    
    
    
    145
    
    
    
    
    
    
    
    9,369
    
    
    
    5,781
    
    
    
    98
    
    
    
    (253
    )
    
    
    
    
    
    
    5,626Nonoperating
expenses(1)
    
    
    16,579
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    16,563
    
    
    
    12,901
    
    
    
    (6
    )
    
    
    (9
    )
    
    
    
    
    
    
    12,886Income (loss)
before equity in
earnings of
unconsolidated
entities, income
taxes and minority
interest
    
    
    (7,595
    )
    
    
    256
    
    
    
    145
    
    
    
    
    
    
    
    (7,194
    )
    
    
    (7,120
    )
    
    
    104
    
    
    
    (244
    )
    
    
    
    
    
    
    (7,260
    )Equity in earnings
of unconsolidated
entities
    
    
    (14
    )
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    332
    
    
    
    
    
    
    
    
    
    
    
    332Income (loss)
before taxes and
minority
interest(2)
    
    $
    (7,609
    )
    
    $
    418
    
    
    $
    145
    
    
    $
    
    
    
    $
    (7,046
    )
    
    $
    (7,120
    )
    
    $
    436
    
    
    $
    (244
    )
    
    $
    
    
    
    $
    (6,928
    )
 (1)
    
    Nonoperating expenses include interest expense, interest income
and exit fees on early payment of debt, amortization of deferred
financing costs, depreciation, and amortization of intangibles.(2)
    
    The following is a reconciliation of the reportable segments net
loss before income taxes and minority interest to the
Trusts consolidated net loss before income taxes and
minority interest:
 2006
    
    
    2005Net loss before income taxes and minority interest for reportable segments
    
    $
    (7,046
    )
    
    $
    (6,928
    )Unallocated corporate amounts:Noncash compensation charge for PIUs and restricted stock
    
    
    (63
    )
    
    
    (257
    )Other corporate expenses
    
    
    (1,184
    )
    
    
    (276
    )Net loss before income taxes and minority interest
    
    $
    (8,293
    )
    
    $
    (7,461
    )
 15




---



##### Table of Contents



7. Commitments and contingencies
 Business
Combinations.
       8. Acquisition of real estate investments
  16




---



##### Table of Contents



Preliminary allocationPlace PortfolioCurrent assets and restricted cash
    
    $
    2,376Student housing properties
    
    
    202,227Other
    
    
    570Total assets acquired
    
    
    205,173Current liabilities
    
    
    (855
    )Mortgage debt assumed net of premium/discount
    
    
    (98,660
    )Acquisition costs
    
    
    (7,446
    )Purchase price
    
    $
    98,212
  Preliminary allocationStatesboroCurrent assets and restricted cash
    
    $
    77Student housing properties
    
    
    12,703Other
    
    
    159Total assets acquired
    
    
    12,939Current liabilities
    
    
    (115
    )Mortgage debt assumed net of premium/discount
    
    
    Acquisition costs
    
    
    (65
    )Purchase price
    
    $
    12,759
   Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2005Pro forma revenue
    
    $
    87,876
    
    
    $
    85,001Pro forma net loss
    
    $
    (11,061
    )
    
    $
    (18,320
    )Loss per share
    
    $
    (0.42
    )
    
    $
    (0.70
    )
  9. Incentive plan
  17




---



##### Table of Contents



Accounting for Stock Issued to Employees,
    RestrictedPIU's
    
    
    Stock
    
    
    TotalOutstanding at December 31, 2005
    
    
    245,000
    
    
    
    186,000
    
    
    
    431,000Granted
    
    
    12,500
    
    
    
    
    
    
    
    12,500Outstanding at March 31, 2006
    
    
    257,500
    
    
    
    186,000
    
    
    
    443,500Granted
    
    
    
    
    
    
    4,000
    
    
    
    4,000Redeemed
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Outstanding at June 30, 2006
    
    
    255,000
    
    
    
    190,000
    
    
    
    445,000Granted
    
    
    5,000
    
    
    
    2,000
    
    
    
    7,000Outstanding at September 30, 2006
    
    
    260,000
    
    
    
    192,000
    
    
    
    452,000Vested at September 30, 2006
    
    
    260,000
    
    
    
    71,883
    
    
    
    331,883
 18




---



##### Table of Contents



10. Subsequent events
   
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this Quarterly Report. Certain statements contained in this filing
are forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including but not limited to statements related to plans for future acquisitions, our
business and investment strategy, market trends and projected capital expenditures. When used in
this report, the words expect, anticipate, intend, plan, believe, seek, estimate,
would, could, should, and similar expressions are generally intended to identify
forward-looking statements. You should not place undue reliance on these forward-looking
statements, which reflect our opinions only as of the date of this Quarterly Report. We assume no
obligation to update or supplement forward-looking statements that become untrue because of
subsequent events. Forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results expressed or implied by
such forward-looking statements. For further information about these and other factors that could
affect our future results, please see the Item 1A.  Risk Factors in our Annual Report on Form
10-K for the year ended December 31, 2005. Investors are cautioned that any forward-looking
statements are not guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those contemplated by such forward-looking statements.
   Overview
   Our Business Segments
  19




---



##### Table of Contents



Student Housing Leasing
      Third-Party Management Services
  Third-Party Development Consulting Services
  20




---



##### Table of Contents



Trends and Outlook
 Rents and Occupancy
  Integration Costs Related to the Acquisition of Additional Properties
  General and Administrative Costs
  Critical Accounting Policies
  Student Housing Leasing Revenue Recognition
  21




---



##### Table of Contents



Student Housing Food Service Revenue Recognition
  Other Leasing Revenue Recognition
  Revenue and Cost Recognition of Third-Party Development Consulting Services
   Student Housing Property Acquisitions
 Business Combinations.
 Repairs and Maintenance
  22




---



##### Table of Contents



Long Lived Assets  Impairment
  Recently Issued Accounting Pronouncements
 Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109
  Fair Value Measurements
 Results of Operations for the Nine Months Ended September 30, 2006 and 2005
  Nine months ended September 30, 2006
    
    
    Nine months ended September 30, 2005(1)Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing leasing
revenue
    
    $
    63,421
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    63,421
    
    
    $
    52,832
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,832Student housing food
service revenue
    
    
    2,670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,670
    
    
    
    2,603
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,603Other leasing revenue
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-party development
consulting services
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    973
    
    
    
    
    
    
    
    
    
    
    
    973Third-party management
revenue
    
    
    
    
    
    
    
    
    
    
    2,051
    
    
    
    
    
    
    
    2,051
    
    
    
    
    
    
    
    
    
    
    
    1,258
    
    
    
    
    
    
    
    1,258Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    2,657
    
    
    
    (2,657
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,862
    
    
    
    (1,862
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    4,209Total revenues
    
    
    76,668
    
    
    
    2,283
    
    
    
    4,708
    
    
    
    3,234
    
    
    
    86,893
    
    
    
    55,435
    
    
    
    973
    
    
    
    3,120
    
    
    
    2,347
    
    
    
    61,875Operating Expenses:Student housing leasing
operations
    
    
    32,159
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,159
    
    
    
    27,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,306Student housing food
service operations
    
    
    2,427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,427
    
    
    
    2,449
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,449General and administrative
    
    
    
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    
    
    
    
    5,254
    
    
    
    
    
    
    
    1,413
    
    
    
    3,055
    
    
    
    
    
    
    
    4,468Intersegment expenses
    
    
    2,657
    
    
    
    
    
    
    
    
    
    
    
    (2,657
    )
    
    
    
    
    
    
    1,862
    
    
    
    
    
    
    
    
    
    
    
    (1,862
    )
    
    
    Reimbursable operating
expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    4,209Total operating expenses
    
    
    37,243
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    3,234
    
    
    
    45,731
    
    
    
    31,617
    
    
    
    1,413
    
    
    
    3,055
    
    
    
    2,347
    
    
    
    38,432Net operating income
(loss)
    
    
    39,425
    
    
    
    682
    
    
    
    1,055
    
    
    
    
    
    
    
    41,162
    
    
    
    23,818
    
    
    
    (440
    )
    
    
    65
    
    
    
    
    
    
    
    23,443Nonoperating expenses(2)
    
    
    48,751
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    48,735
    
    
    
    36,574
    
    
    
    (6
    )
    
    
    (9
    )
    
    
    
    
    
    
    36,559Income (loss) before
equity in earnings of
unconsolidated entities,
income taxes and minority
interest
    
    
    (9,326
    )
    
    
    698
    
    
    
    1,055
    
    
    
    
    
    
    
    (7,573
    )
    
    
    (12,756
    )
    
    
    (434
    )
    
    
    74
    
    
    
    
    
    
    
    (13,116
    )Equity in earnings of
unconsolidated entities
    
    
    (14
    )
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    573
    
    
    
    
    
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    587Income (loss) before
taxes and minorityinterest(3)
    
    $
    (9,340
    )
    
    $
    1,285
    
    
    $
    1,055
    
    
    $
    
    
    
    $
    (7,000
    )
    
    $
    (12,756
    )
    
    $
    153
    
    
    $
    74
    
    
    $
    
    
    
    $
    (12,529
    )
 (1)
    
    The segment information presented for the nine months ended September 30, 2005 represents the combined results of operations for Education Realty Trust, Inc. (post Offering) and
EDR Predecessor (pre Offering).(2)
    
    Nonoperating expenses include interest expense, interest income and exit fees on early payment of debt, amortization of deferred financing costs, depreciation, and amortization of
intangibles.(3)
    
    The following is a reconciliation of the reportable
segments net loss before income taxes and minority interest to the Trusts consolidated net loss before
income taxes and minority interest:
 2006
    
    
    2005Net loss before income taxes and minority interest for reportable segments
    
    $
    (7,000
    )
    
    $
    (12,529
    )Unallocated corporate amounts:Noncash compensation charge for PIUs and restricted stock
    
    
    (591
    )
    
    
    (4,631
    )Other corporate expenses
    
    
    (3,979
    )
    
    
    (1,596
    )Net loss before income taxes and minority interest
    
    $
    (11,570
    )
    
    $
    (18,756
    )
 23




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##### Table of Contents



Student housing leasing
  Nine months
    
    
    Nine monthsended
    
    
    endedSeptember
    
    
    September30, 2006
    
    
    30, 2005
    
    
    DifferenceOccupancyPhysical (1)
    
    
    92.4
    %
    
    
    91.1
    %
    
    
    1.3
    %Economic (2)
    
    
    89.2
    %
    
    
    88.2
    %
    
    
    1.0
    %NarPAB (3)
    
    $
    332
    
    
    $
    329
    
    
    $
    3Other income per avail. bed (4)
    
    $
    24
    
    
    $
    27
    
    
    $
    (3
    )RevPAB (5)
    
    $
    356
    
    
    $
    356
    
    
    $
    Operating expense per bed (6)
    
    $
    181
    
    
    $
    183
    
    
    $
    (2
    )Operating margin
    
    
    49.3
    %
    
    
    48.5
    %
    
    
    0.8
    %Design Beds (7)
    
    
    178,005
    
    
    
    148,852
    
    
    
    29,153
 (1)
    
    Physical occupancy represents a weighted average of the month end occupancies for the respective period.(2)
    
    Economic occupancy represents the effective occupancy calculated by taking net apartment rent accounted for on a GAAP basis for the respective
period divided by market rent for the respective period.(3)
    
    NarPAB represents GAAP net apartment rent for the respective period divided by the sum of the design beds in the portfolio for each of the
included months. Does not include food service revenue or other leasing revenue.(4)
    
    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/app fees, late fees, termination fees, parking fees, transfer fees, damage recovery, utility recovery,
and other misc.(5)
    
    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 of the included months.(6)
    
    Represents property-level operating expense excluding overhead allocation, depreciation and amortization divided by the sum of the design beds
for each of the included months.(7)
    
    Represents the sum of the monthly design beds in the portfolio during the period, excluding Place properties.
 24




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##### Table of Contents



Third-party development consulting services
  Recognized EarningsProject
    
    Beds
    
    Fee Type
    
    2006
    
    2005
    
    DifferenceSlippery Rock University  Phase I
    
    
    1,390
    
    
    Development fee
    
    $
    1,264
    
    
    $
    406
    
    
    $
    858Indiana University of Pennsylvania
    
    
    734
    
    
    Development fee
    
    
    422
    
    
    
    
    
    
    
    422University of Michigan
    
    
    849
    
    
    Development fee
    
    
    459
    
    
    
    
    
    
    
    459Auraria Higher Education System
    
    
    685
    
    
    Development fee
    
    
    
    
    
    
    146
    
    
    
    (146
    )Calhoun Street
    
    
    
    
    
    Purchasing fee
    
    
    
    
    
    
    306
    
    
    
    (306
    )University of North Carolina  Greensboro
    
    
    600
    
    
    Construction
oversight fee
    
    
    45
    
    
    
    
    
    
    
    45University of Louisville  Phase III
    
    
    359
    
    
    Construction
oversight fee
    
    
    57
    
    
    
    13
    
    
    
    44University of Alabama  Birmingham
    
    
    753
    
    
    Construction
oversight fee
    
    
    36
    
    
    
    102
    
    
    
    (66
    )Third-party development consulting services
    
    
    
    
    
    
    
    $
    2,283
    
    
    $
    973
    
    
    $
    1,310California University of Pennsylvania  Phase IV
    
    
    447
    
    
    Development fee
    
    $
    
    
    
    $
    65
    
    
    $
    (65
    )California University of Pennsylvania  Phase V
    
    
    354
    
    
    Development fee
    
    
    225
    
    
    
    
    
    
    $
    225University of North Carolina  Greensboro
    
    
    600
    
    
    Development fee
    
    
    105
    
    
    
    
    
    
    
    105Bloomsburg University
    
    
    407
    
    
    Development fee
    
    
    
    
    
    
    239
    
    
    
    (239
    )University of Louisville  Phase III
    
    
    359
    
    
    Development fee
    
    
    124
    
    
    
    29
    
    
    
    95University of Alabama  Birmingham
    
    
    753
    
    
    Development fee
    
    
    133
    
    
    
    227
    
    
    
    (94
    )Other
    
    
    
    
    
    Development fee
    
    
    
    
    
    
    27
    
    
    
    (27
    )Equity in earnings of unconsolidated entities
    
    
    
    
    
    
    
    $
    587
    
    
    $
    587
    
    
    $
    
  25




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##### Table of Contents



Third-party management services
   Nonoperating expenses
  Other corporate expenses
   26




---



##### Table of Contents



Results of Operations for the Three Months Ended September 30, 2006 and 2005
  Three months ended September 30, 2006
    
    
    Three months ended September 30, 2005Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    19,520
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,520
    
    
    $
    20,145
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,145Student housing
food service
revenue
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895
    
    
    
    893
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    893Other leasing
revenue
    
    
    3,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-party
development
consulting services
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    791
    
    
    
    
    
    
    
    
    
    
    
    791Third-party
management revenue
    
    
    
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    
    
    
    
    511
    
    
    
    
    
    
    
    511Intersegment
revenues
    
    
    
    
    
    
    
    
    
    
    874
    
    
    
    (874
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    809
    
    
    
    (809
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,474
    
    
    
    1,474Total revenues
    
    
    24,124
    
    
    
    856
    
    
    
    1,527
    
    
    
    1,272
    
    
    
    27,779
    
    
    
    21,038
    
    
    
    791
    
    
    
    1,320
    
    
    
    665
    
    
    
    23,814Operating Expenses:Student housing
leasing operations
    
    
    13,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,422
    
    
    
    13,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,570Student housing
food service
operations
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    878General and
administrative
    
    
    
    
    
    
    616
    
    
    
    1,382
    
    
    
    
    
    
    
    1,998
    
    
    
    
    
    
    
    693
    
    
    
    1,573
    
    
    
    
    
    
    
    2,266Intersegment
expenses
    
    
    874
    
    
    
    
    
    
    
    
    
    
    
    (874
    )
    
    
    
    
    
    
    809
    
    
    
    
    
    
    
    
    
    
    
    (809
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,474
    
    
    
    1,474Total operating
expenses
    
    
    15,140
    
    
    
    616
    
    
    
    1,382
    
    
    
    1,272
    
    
    
    18,410
    
    
    
    15,257
    
    
    
    693
    
    
    
    1,573
    
    
    
    665
    
    
    
    18,188Net operating
income (loss)
    
    
    8,984
    
    
    
    240
    
    
    
    145
    
    
    
    
    
    
    
    9,369
    
    
    
    5,781
    
    
    
    98
    
    
    
    (253
    )
    
    
    
    
    
    
    5,626Nonoperating
expenses(1)
    
    
    16,579
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    16,563
    
    
    
    12,901
    
    
    
    (6
    )
    
    
    (9
    )
    
    
    
    
    
    
    12,886Income (loss)
before equity in
earnings of
unconsolidated
entities, income
taxes and minority
interest
    
    
    (7,595
    )
    
    
    256
    
    
    
    145
    
    
    
    
    
    
    
    (7,194
    )
    
    
    (7,120
    )
    
    
    104
    
    
    
    (244
    )
    
    
    
    
    
    
    (7,260
    )Equity in earnings
of unconsolidated
entities
    
    
    (14
    )
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    332
    
    
    
    
    
    
    
    
    
    
    
    332Income (loss)
before taxes and
minorityinterest(2)
    
    $
    (7,609
    )
    
    $
    418
    
    
    $
    145
    
    
    $
    
    
    
    $
    (7,046
    )
    
    $
    (7,120
    )
    
    $
    436
    
    
    $
    (244
    )
    
    $
    
    
    
    $
    (6,928
    )
 (1)
    
    Nonoperating expenses include interest expense, interest income
and exit fees on early payment of debt, amortization of deferred
financing costs, depreciation, and amortization of intangibles.(2)
    
    The following is a reconciliation of the reportable segments
net loss before income taxes and minority interest to the
Trusts consolidated net loss before income taxes and
minority interest.
 2006
    
    
    2005Net loss before income taxes and minority interest for reportable segments
    
    $
    (7,046
    )
    
    $
    (6,928
    )Unallocated corporate amounts:Noncash compensation charge for PIUs and restricted stock
    
    
    (63
    )
    
    
    (257
    )Other corporate expenses
    
    
    (1,184
    )
    
    
    (276
    )Net loss before income taxes and minority interest
    
    $
    (8,293
    )
    
    $
    (7,461
    )
 27




---



##### Table of Contents



Student housing leasing
  Three months
    
    
    Three monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    DifferenceOccupancyPhysical (1)
    
    
    92.0
    %
    
    
    92.0
    %
    
    
    
    %Economic (2)
    
    
    80.8
    %
    
    
    82.8
    %
    
    
    (2.0
    )%NarPAB (3)
    
    $
    298
    
    
    $
    304
    
    
    $
    (6
    )Other income per avail. bed (4)
    
    $
    25
    
    
    $
    41
    
    
    $
    (16
    )RevPAB (5)
    
    $
    323
    
    
    $
    345
    
    
    $
    (22
    )Operating expense per bed (6)
    
    $
    222
    
    
    $
    232
    
    
    $
    (10
    )Operating margin
    
    
    31.2
    %
    
    
    32.6
    %
    
    
    (1.4
    )%Design Beds (7)
    
    
    60,375
    
    
    
    58,503
    
    
    
    1,872
 (1)
    
    Physical occupancy represents a weighted average of the month end occupancies for the respective period.(2)
    
    Economic occupancy represents the effective occupancy calculated by taking net apartment rent accounted for
on a GAAP basis for the respective period divided by market rent for the respective period.(3)
    
    NarPAB represents GAAP net apartment rent for the respective period divided by the sum of the design beds in
the portfolio for each of the included months. Does not include food service revenue or other leasing
revenue.(4)
    
    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/app fees, late fees, termination
fees, parking fees, transfer fees, damage recovery, utility recovery, and other misc.(5)
    
    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 of the included months.(6)
    
    Represents property-level operating expense excluding overhead allocation, depreciation and amortization
divided by the sum of the design beds for each of the included months.(7)
    
    Represents the sum of the monthly design beds in the portfolio during the period, excluding Place properties.
    28




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##### Table of Contents



Third-party development consulting services
    Third-party management services
   Nonoperating expenses
  Other corporate expenses
  Funds from Operations
  29




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net loss
    
    $
    (8,189
    )
    
    $
    (7,184
    )
    
    $
    (11,483
    )
    
    $
    (17,559
    )Plus student housing property
depreciation and amortization of lease
intangibles
    
    
    9,111
    
    
    
    8,159
    
    
    
    27,179
    
    
    
    23,438Plus equity portion of real estate
depreciation and amortization on equity
investees
    
    
    5
    
    
    
    
    
    
    
    5
    
    
    
    Plus minority interest expense/(benefit)
    
    
    (485
    )
    
    
    (617
    )
    
    
    (550
    )
    
    
    (1,384
    )Funds from operations
    
    $
    442
    
    
    $
    358
    
    
    $
    15,151
    
    
    $
    4,495
 Liquidity and Capital Resources
 Revolving Credit Facility and Other Short Term Loans
      30




---



##### Table of Contents



Liquidity outlook and capital requirements
       Predevelopment expenditures
  Long-term liquidity requirements
   31




---



##### Table of Contents



Contractual obligations
  Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(In thousands)Contractual Obligations:Long-Term Debt Obligations(1)
    
    $
    21,901
    
    
    $
    421,688
    
    
    $
    1,835
    
    
    $
    48,102
    
    
    $
    493,526Contractual Interest Obligations(2)
    
    
    6,479
    
    
    
    67,080
    
    
    
    6,373
    
    
    
    2,454
    
    
    
    82,386Operating Lease Obligations(3)
    
    
    125
    
    
    
    1,783
    
    
    
    1,510
    
    
    
    
    
    
    
    3,418Capital Reserve Obligations(4)
    
    
    1,646
    
    
    
    3,032
    
    
    
    1,302
    
    
    
    1,170
    
    
    
    7,150Total
    
    $
    30.151
    
    
    $
    493,583
    
    
    $
    11,020
    
    
    $
    51,726
    
    
    $
    586,480
 (1)
    
    Includes required monthly principal amortization and amounts due at maturity on first mortgage
debt secured by student housing properties and principal amortization on the Amended Revolver
and the Term Loan. The first mortgage debt does not include $2,454 of
unamortized debt premium.(2)
    
    Includes contractual interest payments.(3)
    
    Includes future minimum lease commitments under operating lease obligations.(4)
    
    Includes future annual contributions to the capital reserve as required by certain mortgage debt.
    Distributions
   Off-Balance Sheet Arrangements
  Inflation
  32




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##### Table of Contents



Recent Developments
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
     
 Item 4. Controls and Procedures.
 Managements Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
   33




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
  34




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##### Table of Contents



SIGNATURES
  EDUCATION REALTY TRUST, INC.Date: November 13, 2006
    By       /s/ Paul O. BowerPaul O. BowerPresident, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer) Date: November 13, 2006
    By       /s/ Randall H. BrownRandall H. BrownExecutive Vice President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial Officer) Date: November 13, 2006
    By       /s/ J. Drew KoesterJ. Drew KoesterVice President and Chief Accounting Officer
(Principal Accounting Officer) 35




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##### Table of Contents



EXHIBIT INDEX
 3.1
    
    
    Second Articles of Amendment and Restatement of Education
Realty Trust, Inc. (Incorporated by reference to Exhibit 3.1
to the Companys Amendment No. 2 to its Registration
Statement on Form S-11 (File No. 333-1192364), filed on
December 10, 2004.)3.2
    
    
    Bylaws of Education Realty Trust, Inc. (Incorporated by
reference to Exhibit 3.2 to the Companys Registration
Statement on Form S-11 (File No. 333-119264), filed on
September 24, 2004.)4.1
    
    
    Form of Certificate for Common Stock of Education Realty
Trust, Inc. (Incorporated by reference to Exhibit 4.1 to the
Companys Amendment No. 5 to its Registration Statement on
Form S-11 (File No. 333-1192364), filed on January 24,
2005.)4.2
    
    
    Form of Education Realty Trust, Inc. Common Stock Purchase
Warrant dated January 31, 2005, issued to JPI Investment
Company, L.P. (Incorporated by reference to Exhibit 4.2 to
the Companys Registration Statement on Form S-11 (File No.
333-119264), filed on September 24, 2004.)4.3
    
    
    Form of Registration Rights Agreement dated January 31,
2005, by and among Education Realty Trust, Inc., Education
Realty Operating Partnership, LP, JPI Investment Company,
L.P. and the unit holders whose names are set forth on the
signature pages thereto. (Incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form
S-11 (File No. 333-119264), filed on September 24, 2004.)10.1**
    
    
    Form of Restricted Stock Award Agreement (Filed as Exhibit
10.1 to the Registrants Current Report on Form 8-K filed on
August 17, 2006 and incorporated herein by reference).Exhibit 31.1
    
    Certification of Principal Executive Officer pursuant to
Rule 13a-14(a) of the Securities Exchange Act, as amended.Exhibit 31.2
    
    Certification of Principal Financial Officer pursuant to
Rule 13a-14(a) of the Securities Exchange Act, as amended.Exhibit 32.1*
    
    Section 906 Certification of Chief Executive OfficerExhibit 32.2*
    
    Section 906 Certification of Chief Financial Officer
 *
    
    In accordance with Release No. 34-47986, this Exhibit is hereby
furnished to the SEC as an accompanying document and is not deemed
filed for purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that Section, nor
shall it be deemed incorporated by reference into any filing under the
Securities Act of 1933.**
    
    Management contract or compensatory plan or arrangement.