UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 FORM
10-Q
 (Mark
One)
 x
              
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For the
quarterly period ended June 30, 2010
 Or
  ̈
              
              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.
 (Exact
name of registrant as specified in its charter)
 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) 259-2500Not
      Applicable(Former
      name, former address and former fiscal year, if changed since last
      report)
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No  ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes  ̈ No  ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
 
 Large
      accelerated filer  ̈
                Accelerated
      filer xNon-accelerated
      filer  ̈
                  (Do
      not check if a smaller reporting company)
                Smaller
      reporting company  ̈
 
 Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes  ̈ No x
 
 As of
August 5, 2010, the latest practicable date, the Registrant had outstanding
57,463,792shares of
common stock, $.01 par value per share.
  
 
  EDUCATION REALTY TRUST, INC.
 FORM
10-Q
 QUARTER
ENDED JUNE 30, 2010
 TABLE
OF CONTENTS
 
 PagePART
      I—FINANCIAL INFORMATION
                          
                          3Item 1.
      Financial Statements
                          
                          3Condensed
      Consolidated Balance Sheets of Education Realty Trust, Inc. and
      Subsidiaries as of June 30, 2010 and December 31,
2009
                          
                          3Condensed
      Consolidated Statements of Operations of Education Realty Trust, Inc. and
      Subsidiaries for the six months ended June 30, 2010 and
    2009
                          
                          4Condensed
      Consolidated Statements of Operations of Education Realty Trust, Inc. and
      Subsidiaries for the three months ended June 30, 2010 and
    2009
                          
                          5Condensed
      Consolidated Statements of Changes in Equity of Education Realty Trust,
      Inc. and Subsidiaries for the six months ended June 30, 2010 and
      2009.
                          
                          6Condensed
      Consolidated Statements of Cash Flows of Education Realty Trust, Inc. and
      Subsidiaries for the six months ended June 30, 2010 and
    2009
                          
                          7Notes
      to Condensed Consolidated Financial Statements
                          
                          9Item 2.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations
                          
                          25Item 3.
      Quantitative and Qualitative Disclosures about Market Risk
                          
                          44Item 4.
      Controls and Procedures
                          
                          45PART
      II — OTHER INFORMATION
                          
                          45Item 1.
      Legal Proceedings
                          
                          45Item 1A.
      Risk Factors
                          
                          45Item 2.
      Unregistered Sales of Equity Securities and Use of
Proceeds
                          
                          46Item 3.
      Defaults upon Senior Securities
                          
                          47Item 4.
      Removed and Reserved
                          
                          47Item 5.
      Other Information
                          
                          47Item 6.
      Exhibits
                          
                          47Signatures
                          
                          48
  2
 
 Part
I — Financial Information
 
 Item 1.
Financial Statements.
 
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (Amounts
in thousands, except share and per share data)
 
 June30,2010
                    
                    
                    December31,2009(Unaudited)ASSETSAssets:Student
      housing properties, net
                    
                    $
                    743,462
                    
                    
                    $
                    749,884Corporate
      office furniture, net
                    
                    
                    956
                    
                    
                    
                    1,118Cash
      and cash equivalents
                    
                    
                    23,348
                    
                    
                    
                    31,169Restricted
      cash
                    
                    
                    5,167
                    
                    
                    
                    4,579Student
      contracts receivable, net
                    
                    
                    400
                    
                    
                    
                    386Receivable
      from affiliate
                    
                    
                    21
                    
                    
                    
                    18Management
      fee receivable from third party
                    
                    
                    227
                    
                    
                    
                    277Goodwill
      and other intangibles, net
                    
                    
                    3,070
                    
                    
                    
                    3,073Other
      assets
                    
                    
                    14,404
                    
                    
                    
                    14,109Total
      assets
                    
                    $
                    791,055
                    
                    
                    $
                    804,613LIABILITIES
      AND EQUITYLiabilities:Mortgage
      and construction loans, net of unamortized
premium/discount
                    
                    $
                    399,243
                    
                    
                    $
                    406,365Accounts
      payable
                    
                    
                    318
                    
                    
                    
                    235Accrued
      expenses
                    
                    
                    14,390
                    
                    
                    
                    11,423Deferred
      revenue
                    
                    
                    7,071
                    
                    
                    
                    10,346Total
      liabilities
                    
                    
                    421,022
                    
                    
                    
                    428,369Commitments
      and contingencies (see Note 6)
                    
                    
                    —
                    
                    
                    
                    —Redeemable
      noncontrolling interests
                    
                    
                    10,725
                    
                    
                    
                    11,079Equity:Education
      Realty Trust, Inc. stockholders’ equity:Common
      stock, $.01 par value, 200,000,000 shares authorized, 56,823,288 and
      56,705,605 shares issued and outstanding at June 30, 2010 and
      December 31, 2009, respectively
                    
                    
                    568
                    
                    
                    
                    567Preferred
      stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and
      outstanding
                    
                    
                    —
                    
                    
                    
                    —Additional
      paid-in capital
                    
                    
                    407,796
                    
                    
                    
                    410,455Accumulated
      deficit
                    
                    
                    (49,056
                    )
                    
                    
                    (48,636
                    )Total
      Education Realty Trust, Inc. stockholders’ equity
                    
                    
                    359,308
                    
                    
                    
                    362,386Noncontrolling
      interest
                    
                    
                    —
                    
                    
                    
                    2,779Total
      equity
                    
                    
                    359,308
                    
                    
                    
                    365,165Total
      liabilities and equity
                    
                    $
                    791,055
                    
                    
                    $
                    804,613
 
 See
accompanying notes to the condensed consolidated financial
statements.
  3
 
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Amounts
in thousands, except share and per share data)
 (Unaudited)
  Six
      months
                  
                  
                  Six
      monthsended
                  
                  
                  endedJune
      30,
                  
                  
                  June
      30,2010
                  
                  
                  2009Revenues:Student
      housing leasing revenue
                  
                  $
                  58,045
                  
                  
                  $
                  57,280Third-party
      development consulting services
                  
                  
                  1,341
                  
                  
                  
                  2,716Third-party
      management services
                  
                  
                  1,573
                  
                  
                  
                  1,632Operating
      expense reimbursements
                  
                  
                  3,865
                  
                  
                  
                  4,226Total
      revenues
                  
                  
                  64,824
                  
                  
                  
                  65,854Operating
      expenses:Student
      housing leasing operations
                  
                  
                  26,646
                  
                  
                  
                  26,099General
      and administrative
                  
                  
                  8,336
                  
                  
                  
                  7,835Depreciation
      and amortization
                  
                  
                  14,891
                  
                  
                  
                  14,274Reimbursable
      operating expenses
                  
                  
                  3,865
                  
                  
                  
                  4,226Total
      operating expenses
                  
                  
                  53,738
                  
                  
                  
                  52,434Operating
      income
                  
                  
                  11,086
                  
                  
                  
                  13,420Nonoperating
      expenses:Interest
      expense
                  
                  
                  11,129
                  
                  
                  
                  12,502Amortization
      of deferred financing costs
                  
                  
                  668
                  
                  
                  
                  519Interest
      income
                  
                  
                  (228
                  )
                  
                  
                  (154
                  )Gain
      on extinguishment of debt
                  
                  
                  —
                  
                  
                  
                  (830
                  )Total
      nonoperating expenses
                  
                  
                  11,569
                  
                  
                  
                  12,037Income
      (loss) before equity in earnings of unconsolidated entities, income taxes
      and discontinued operations
                  
                  
                  (483
                  )
                  
                  
                  1,383Equity
      in earnings of unconsolidated entities
                  
                  
                  86
                  
                  
                  
                  146Income
      (loss) before income taxes and discontinued operations
                  
                  
                  (397
                  )
                  
                  
                  1,529Income
      tax expense (benefit)
                  
                  
                  (176
                  )
                  
                  
                  690Income
      (loss) from continuing operations
                  
                  
                  (221
                  )
                  
                  
                  839Loss
      from discontinued operations
                  
                  
                  —
                  
                  
                  
                  (18
                  )Net
      income (loss)
                  
                  
                  (221
                  )
                  
                  
                  821Less:
      Net income attributable to the noncontrolling interest
                  
                  
                  199
                  
                  
                  
                  157Net
      income (loss) attributable to Education Realty Trust, Inc.
                  
                  $
                  (420
                  )
                  
                  $
                  664Earnings
      per share information:Income
      (loss) attributable to Education Realty Trust, Inc. common stockholders
      per share — basic and diluted:Continuing
      operations
                  
                  $
                  (0.01
                  )
                  
                  $
                  0.02Discontinued
      operations
                  
                  
                  —
                  
                  
                  
                  —Net
      income (loss) attributable to Education Realty Trust, Inc. common
      stockholders per share
                  
                  $
                  (0.01
                  )
                  
                  $
                  0.02Weighted
      average shares of common stock outstanding – basic
                  
                  
                  56,846,884
                  
                  
                  
                  28,518,430Weighted
      average shares of common stock outstanding – diluted
                  
                  
                  56,846,884
                  
                  
                  
                  29,639,425Amounts
      attributable to Education Realty Trust, Inc. – common
      stockholders:Income
      (loss) from continuing operations, net of tax
                  
                  $
                  (420
                  )
                  
                  $
                  682Loss
      from discontinued operations, net of tax
                  
                  
                  —
                  
                  
                  
                  (18
                  )Net
      income (loss)
                  
                  
                  (420
                  )
                  
                  
                  664Distributions
      per share of common stock
                  
                  $
                  0.1000
                  
                  
                  $
                  0.2050
 
 See
accompanying notes to the condensed consolidated financial
statements.
  4
  CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Amounts
in thousands, except share and per share data)
 (Unaudited)
 
 Three months
                  
                  
                  Three monthsended
                  
                  
                  endedJune
      30,
                  
                  
                  June
      30,2010
                  
                  
                  2009Revenues:Student
      housing leasing revenue
                  
                  $
                  28,394
                  
                  
                  $
                  27,967Third-party
      development consulting services
                  
                  
                  648
                  
                  
                  
                  1,259Third-party
      management services
                  
                  
                  707
                  
                  
                  
                  723Operating
      expense reimbursements
                  
                  
                  1,957
                  
                  
                  
                  2,036Total
      revenues
                  
                  
                  31,706
                  
                  
                  
                  31,985Operating
      expenses:Student
      housing leasing operations
                  
                  
                  13,208
                  
                  
                  
                  12,929General
      and administrative
                  
                  
                  4,036
                  
                  
                  
                  3,841Depreciation
      and amortization
                  
                  
                  7,475
                  
                  
                  
                  7,110Reimbursable
      operating expenses
                  
                  
                  1,957
                  
                  
                  
                  2,036Total
      operating expenses
                  
                  
                  26,676
                  
                  
                  
                  25,916Operating
      income
                  
                  
                  5,030
                  
                  
                  
                  6,069Nonoperating
      expenses:Interest
      expense
                  
                  
                  5,518
                  
                  
                  
                  6,150Amortization
      of deferred financing costs
                  
                  
                  334
                  
                  
                  
                  218Interest
      income
                  
                  
                  (111
                  )
                  
                  
                  (105
                  )Gain
      on extinguishment of debt
                  
                  
                  —
                  
                  
                  
                  (830
                  )Total
      nonoperating expenses
                  
                  
                  5,741
                  
                  
                  
                  5,433Income
      (loss) before equity in earnings of unconsolidated entities, income taxes
      and discontinued operations
                  
                  
                  (711
                  )
                  
                  
                  636Equity
      in earnings of unconsolidated entities
                  
                  
                  7
                  
                  
                  
                  46Income
      (loss) before income taxes and discontinued operations
                  
                  
                  (704
                  )
                  
                  
                  682Income
      tax expense (benefit)
                  
                  
                  (102
                  )
                  
                  
                  502Income
      (loss) from continuing operations
                  
                  
                  (602
                  )
                  
                  
                  180Loss
      from discontinued operations
                  
                  
                  —
                  
                  
                  
                  (2
                  )Net
      income (loss)
                  
                  
                  (602
                  )
                  
                  
                  178Less:
      Net loss attributable to the noncontrolling interest
                  
                  
                  (12
                  )
                  
                  
                  (53
                  )Net
      income (loss) attributable to Education Realty Trust, Inc.
                  
                  $
                  (590
                  )
                  
                  $
                  231Earnings
      per share information:Income
      (loss) attributable to Education Realty Trust, Inc. common stockholders
      per share — basic and diluted:Continuing
      operations
                  
                  $
                  (0.01
                  )
                  
                  $
                  0.01Discontinued
      operations
                  
                  
                  —
                  
                  
                  
                  —Net
      income (loss) attributable to Education Realty Trust, Inc. common
      stockholders per share
                  
                  $
                  (0.01
                  )
                  
                  $
                  0.01Weighted
      average shares of common stock outstanding – basic
                  
                  
                  56,932,903
                  
                  
                  
                  28,520,344Weighted
      average shares of common stock outstanding – diluted
                  
                  
                  56,932,903
                  
                  
                  
                  29,641,339Amounts
      attributable to Education Realty Trust, Inc. – common
      stockholders:Income
      (loss) from continuing operations, net of tax
                  
                  $
                  (590
                  )
                  
                  $
                  233Loss
      from discontinued operations, net of tax
                  
                  
                  —
                  
                  
                  
                  (2
                  )Net
      income (loss)
                  
                  $
                  (590
                  )
                  
                  $
                  231Distributions
      per common share
                  
                  $
                  0.0500
                  
                  
                  $
                  0.1025
 
 See
accompanying notes to the condensed consolidated financial
statements.
  5
 
 CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 (Amounts
in thousands, except share data)
 (Unaudited)
 
 Common
      Stock
                    
                    
                    AdditionalPaid-In
                    
                    
                    Accumulated
                    
                    
                    NoncontrollingShares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Deficit
                    
                    
                    Interest
                    
                    
                    TotalBalance,
      December 31, 2008
                    
                    
                    28,475,855
                    
                    
                    $
                    285
                    
                    
                    $
                    308,356
                    
                    
                    $
                    (41,381
                    )
                    
                    $
                    2,918
                    
                    
                    $
                    270,178Common
      stock issued to officers and directors
                    
                    
                    8,000
                    
                    
                    
                    —
                    
                    
                    
                    34
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    34Amortization
      of restricted stock
                    
                    
                    17,994
                    
                    
                    
                    —
                    
                    
                    
                    302
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    302Cash
      dividends
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (5,846
                    )
                    
                    
                    —
                    
                    
                    
                    (57
                    )
                    
                    
                    (5,903
                    )PIUs
      forfeited
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    30
                    
                    
                    
                    —
                    
                    
                    
                    (30
                    )
                    
                    
                    —PIUs
      issued
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    13
                    
                    
                    
                    13Net
      income
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    664
                    
                    
                    
                    19
                    
                    
                    
                    683Balance,
      June 30, 2009
                    
                    
                    28,501,849
                    
                    
                    $
                    285
                    
                    
                    $
                    302,876
                    
                    
                    $
                    (40,717
                    )
                    
                    $
                    2,863
                    
                    
                    $
                    265,307Balance,
      December 31, 2009
                    
                    
                    56,705,605
                    
                    
                    $
                    567
                    
                    
                    $
                    410,455
                    
                    
                    $
                    (48,636
                    )
                    
                    $
                    2,779
                    
                    
                    $
                    365,165Common
      stock issued to officers and directors
                    
                    
                    34,000
                    
                    
                    
                    —
                    
                    
                    
                    336
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    336Common
      stock issued to retire PIUs
                    
                    
                    50,826
                    
                    
                    
                    1
                    
                    
                    
                    196
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    197Amortization
      of restricted stock
                    
                    
                    32,857
                    
                    
                    
                    —
                    
                    
                    
                    329
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    329PIUs
      forfeited and redeemed
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,286
                    
                    
                    
                    —
                    
                    
                    
                    (2,767
                    )
                    
                    
                    (481
                    )Cash
      dividends
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (5,684
                    )
                    
                    
                    —
                    
                    
                    
                    (22
                    )
                    
                    
                    (5,706
                    )Offering
      costs
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (122
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (122
                    )Net
      income (loss)
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (420
                    )
                    
                    
                    10
                    
                    
                    
                    (410
                    )Balance,
      June 30, 2010
                    
                    
                    56,823,288
                    
                    
                    $
                    568
                    
                    
                    $
                    407,796
                    
                    
                    $
                    (49,056
                    )
                    
                    $
                    —
                    
                    
                    $
                    359,308
 
 See
accompanying notes to the condensed consolidated financial
statements.
  6
 
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts
in thousands)
 (Unaudited)
 
 Six
      months
                    
                    
                    Six
      monthsended
                    
                    
                    endedJune
      30,
                    
                    
                    June
      30,2010
                    
                    
                    2009Operating
      activities:Net
      income (loss)
                    
                    $
                    (221
                    )
                    
                    $
                    821Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization
                    
                    
                    14,891
                    
                    
                    
                    14,274Depreciation
      included in discontinued operations
                    
                    
                    —
                    
                    
                    
                    25Deferred tax
      expense
                    
                    
                    5
                    
                    
                    
                    156Loss
      (gain)  on disposal of assets
                    
                    
                    14
                    
                    
                    
                    (23
                    )Gain
      on extinguishment of debt
                    
                    
                    —
                    
                    
                    
                    (830
                    )Amortization
      of deferred financing costs
                    
                    
                    668
                    
                    
                    
                    519Loss
      (gain) on interest rate cap
                    
                    
                    231
                    
                    
                    
                    (205
                    )Amortization
      of unamortized debt premiums/discounts
                    
                    
                    (199
                    )
                    
                    
                    (202
                    )Distributions
      of earnings from unconsolidated entities
                    
                    
                    227
                    
                    
                    
                    182Noncash
      compensation expense related to stock-based incentive
    awards
                    
                    
                    382
                    
                    
                    
                    353Equity
      in earnings of unconsolidated entities
                    
                    
                    (86
                    )
                    
                    
                    (146
                    )Change
      in operating assets and liabilities
                    
                    
                    (3,409
                    )
                    
                    
                    9,425Net
      cash provided by operating activities
                    
                    
                    12,503
                    
                    
                    
                    24,349Investing
      activities:Purchase
      of corporate furniture and fixtures
                    
                    
                    (43
                    )
                    
                    
                    (84
                    )Restricted
      cash
                    
                    
                    (588
                    )
                    
                    
                    (667
                    )Investment
      in student housing properties
                    
                    
                    (8,275
                    )
                    
                    
                    (4,945
                    )Payments
      on notes receivable
                    
                    
                    2,078
                    
                    
                    
                    136Insurance
      proceeds received from property damage
                    
                    
                    —
                    
                    
                    
                    175Investment
      in assets under development
                    
                    
                    —
                    
                    
                    
                    (22,676
                    )Investment
      in unconsolidated entities
                    
                    
                    (40
                    )
                    
                    
                    (293
                    )Net
      cash used in investing activities
                    
                    
                    (6,868
                    )
                    
                    
                    (28,354
                    )Financing
      activities:Payment
      of mortgage and construction notes
                    
                    
                    (6,923
                    )
                    
                    
                    (1,396
                    )Borrowings
      under mortgage notes and construction loans
                    
                    
                    —
                    
                    
                    
                    9,832Borrowing
      (repayment) under the Amended Revolver, net
                    
                    
                    —
                    
                    
                    
                    (3,300
                    )Payment
      of offering costs
                    
                    
                    (122
                    )
                    
                    
                    —Debt
      refund (issuance) costs
                    
                    
                    6
                    
                    
                    
                    (427
                    )Proceeds
      from refund of defeasance costs
                    
                    
                    —
                    
                    
                    
                    830Redemption
      of noncontrolling interests
                    
                    
                    (167
                    )
                    
                    
                    —Dividends
      and distributions paid to common and restricted
    stockholders
                    
                    
                    (5,684
                    )
                    
                    
                    (5,846
                    )Dividends
      and distributions paid to noncontrolling interests
                    
                    
                    (566
                    )
                    
                    
                    (621
                    )Net
      cash used in financing activities
                    
                    
                    (13,456
                    )
                    
                    
                    (928
                    )Net
      decrease in cash and cash equivalents
                    
                    
                    (7,821
                    )
                    
                    
                    (4,933
                    )Cash
      and cash equivalents, beginning of period
                    
                    
                    31,169
                    
                    
                    
                    9,003Cash
      and cash equivalents, end of period
                    
                    $
                    23,348
                    
                    
                    $
                    4,070
 
 See
accompanying notes to the condensed consolidated financial
statements.
  7
 
 Six
      months
                  
                  
                  Six
      monthsended
                  
                  
                  endedJune
      30,
                  
                  
                  June
      30,2010
                  
                  
                  2009Supplemental
      disclosure of cash flow information:Interest
      paid
                  
                  $
                  10,830
                  
                  
                  $
                  12,342Income
      taxes paid
                  
                  $
                  179
                  
                  
                  $
                  408
 
 See
accompanying notes to the condensed consolidated financial
statements.
  8
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts
in thousands, except share and per share data)
 (Unaudited)
 
 1.
Organization and description of business
 
 Education
Realty Trust, Inc. (the “Trust”) was organized in the state of Maryland on
July 12, 2004 and commenced operations as a real estate investment trust
(“REIT”) effective with the initial public offering (the “Offering”) that was
completed on January 31, 2005. Under the Trust’s Articles of Incorporation,
as amended, the Trust is authorized to issue up to 200 million shares of
common stock and 50 million shares of preferred stock, each having a par
value of $0.01 per share.
 
 The Trust
operates primarily through a majority-owned Delaware limited partnership,
Education Realty Operating Partnership, LP (the “Operating Partnership”). The
Operating Partnership owns, directly or indirectly, interests in collegiate
student housing communities located near major universities in the United
States.
 
 The Trust
also provides real estate facility management, development and other advisory
services through the following subsidiaries of the Operating
Partnership:
 
 •
              Allen
      & O’Hara Education Services, Inc. (“AOES”), a Delaware corporation
      performing collegiate student housing management
    activities.
 
 •
              Allen
      & O’Hara Development Company, LLC (“AODC”), a Delaware limited
      liability company providing development consulting services for third
      party collegiate student housing
communities.
 
 The Trust
is subject to the risks involved with the ownership and operation of residential
real estate near major universities throughout the United States. The
risks include, among others, those normally associated with changes in the
demand for housing by students at the related universities, competition for
tenants, creditworthiness of tenants, changes in tax laws, interest rate levels,
the availability of financing, and potential liability under environmental and
other laws.
 
 2.
Summary of significant accounting policies
 
 Basis
of presentation and principles of consolidation
 
 The
accompanying condensed consolidated financial statements have been prepared on
the accrual basis of accounting in conformity with accounting principles
generally accepted in the United States (“GAAP”). The accompanying condensed
consolidated financial statements of the Trust represent the assets and
liabilities and operating results of the Trust and its majority owned
subsidiaries.
 
 The
Trust, as the sole general partner of the Operating Partnership, has the
responsibility and discretion in the management and control of the Operating
Partnership, and the limited partners of the Operating Partnership, in such
capacity, have no authority to transact business for, or participate in the
management activities of the Operating Partnership. Accordingly, the Trust
accounts for the Operating Partnership using the consolidation
method.
 
 All
intercompany balances and transactions have been eliminated in the accompanying
condensed consolidated financial statements.
 
 Interim
financial information
 
 The
accompanying unaudited interim financial statements include all adjustments,
consisting only of normal recurring adjustments, that in the opinion of
management are necessary for a fair presentation of the Trust’s financial
position, results of operations and cash flows for such periods. Because of the
seasonal nature of the business, the operating results and cash flows are not
necessarily indicative of results that may be expected for any other interim
periods or for the full fiscal year. These financial statements should be read
in conjunction with the Trust’s consolidated financial statements and related
notes, included in the Trust’s Annual Report on Form 10-K for the year
ended December 31, 2009, filed with the Securities and Exchange Commission
(the “SEC”).
  9
 
 Use
of estimates
 
 The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates and assumptions are used by
management in determining the recognition of third-party development consulting
services revenue under the percentage of completion method, useful lives of
student housing assets, the valuation of goodwill, the initial valuations and
underlying allocations of purchase price in connection with student property
acquisitions, the determination of fair value for impairment assessments, and in
the recording of the allowance for doubtful accounts. Actual results could
differ from those estimates.
 
 Reclassifications
 
 Certain
prior period amounts have been reclassified to conform to the current period
presentation.  In the condensed consolidated statements of operations, food
service revenue had previously been presented separately from student housing
leasing revenue. The reclassification of food service revenue to student housing
leasing revenue was not material to our condensed consolidated financial
statements and had no impact on our previously reported net income, changes in
equity, financial position or net cash flows from operations.
 
 Cash
and cash equivalents
 
 All
highly-liquid investments with a maturity of three months or less when purchased
are considered cash equivalents. Restricted cash is excluded from cash for the
purpose of preparing the condensed consolidated statements of cash flows. The
Trust maintains cash balances in various banks. At times, the amounts of cash
may exceed the amount the Federal Deposit Insurance Corporation (“FDIC”)
insures.  As of June 30, 2010, the Trust had $16,692 of cash on deposit
that was uninsured by the FDIC or in excess of the FDIC limits.
 
 Restricted
cash
 
 Restricted
cash includes escrow accounts held by lenders for the purposes of paying taxes,
insurance, principal and interest and funding capital improvements.
 
 Distributions
 
 The Trust
pays regular quarterly cash distributions to stockholders. These distributions
are determined quarterly by the Board of Directors (“Board”) based on the
operating results, economic conditions, capital expenditure requirements, the
REIT annual distribution requirements of the Internal Revenue Code of 1986, as
amended (the “Code”), leverage covenants imposed by our revolving credit
facility and other debt documents, and any other matters the Board deems
relevant.
 
 Student
housing properties
 
 Land,
land improvements, buildings and improvements, and furniture, fixtures and
equipment are recorded at cost. Buildings and improvements are depreciated over
15 to 40 years, land improvements are depreciated over 15 years and
furniture, fixtures, and equipment are depreciated over 3 to 7 years.
Depreciation is computed using the straight-line method for financial reporting
purposes over the estimated useful life.
  10
 
 Acquired
student housing communities’ results of operations are included in the Trust’s
results of operations from the respective dates of acquisition. 
Appraisals, estimates of cash flows and valuation techniques are used to
allocate the purchase price of acquired property between land, land
improvements, buildings and improvements, furniture, fixtures and equipment and
identifiable intangibles such as amounts related to in-place leases. On January
1, 2009, the Trust adopted the authoritative guidance issued by the Financial
Accounting Standards Board (“FASB”), which prospectively changed the
requirements for how an acquirer recognizes and measures the identifiable assets
acquired, the liabilities assumed, any noncontrolling interest in the acquiree
and the goodwill acquired.  The guidance also enhanced the disclosures to
enable the evaluation of the nature and financial effects of the business
combination and requires that pre-acquisition costs be expensed as
incurred.  Pre-acquisition costs, which include legal and professional fees
and other third-party costs related directly to the acquisition of a community,
were accounted for as part of the purchase price prior to the adoption of the
guidance issued by the FASB.
 
 Management
assesses impairment of long-lived assets to be held and used whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Management uses an estimate of future undiscounted cash flows of
the related asset based on its intended use to determine whether the carrying
value is recoverable. If the Trust determines that the carrying value of an
asset is not recoverable, the fair value of the asset is estimated and an
impairment loss is recorded to the extent the carrying value exceeds estimated
fair value.
 
 When a
student housing community has met the criteria to be classified as held for
sale, the fair value less cost to sell such asset is estimated. If the fair
value less cost to sell the asset is less than the carrying amount of the asset,
an impairment charge is recorded for the estimated loss. Depreciation expense is
no longer recorded once a student housing community has met the held for sale
criteria. Operations of student housing communities that are sold or classified
as held for sale are recorded as part of discontinued operations for all periods
presented.
 
 Repairs,
maintenance and major improvements
 
 The costs
of ordinary repairs and maintenance are charged to operations when incurred.
Major improvements that extend the life of an asset are capitalized and
depreciated over the remaining useful life of the asset. Planned major repair,
maintenance and improvement projects are capitalized when performed. In some
circumstances, the lenders require the Trust to maintain a reserve account for
future repairs and capital expenditures. These amounts are classified as
restricted cash as the funds are not available for current use.
 
 Investment
in unconsolidated entities
 
 The
Operating Partnership accounts for its investments in unconsolidated joint
ventures, limited liability companies and limited partnerships using the equity
method whereby the cost of an investment is adjusted for the Trust’s share of
earnings of the respective investment reduced by distributions received. The
earnings and distributions of the unconsolidated joint ventures, limited
liability companies and limited partnerships are allocated based on each owner’s
respective ownership interests. These investments are classified as other assets
in the accompanying condensed consolidated balance sheets.
 
 Deferred
financing costs
 
 Deferred
financing costs represent costs incurred in connection with acquiring debt
facilities. These costs are amortized over the terms of the related debt using a
method that approximates the effective interest method. Deferred financing
costs, net of amortization, are included in other assets in the accompanying
condensed consolidated balance sheets.
 
 Common
stock issuances and offering costs
 
 Specific
incremental costs directly attributable to the issuance of common stock are
charged against the gross proceeds of the related issuance. Accordingly,
underwriting commissions and other stock issuance costs are reflected as a
reduction of additional paid-in capital in the accompanying condensed
consolidated statement of changes in equity.
 
 On June
2, 2010, the Trust entered into two equity distribution agreements. 
Pursuant to the terms and conditions of the agreements, the Trust may issue and
sell shares of its common stock having an aggregate offering amount of up to
$50,000. Sales of the common stock will depend upon market conditions and other
factors to be determined by the Trust and may be made in transactions that are
deemed to be “at-the-market” offerings as defined in Rule 415 under the
Securities Act of 1933, as amended. The Trust has no obligation to sell any of
the common stock, and may at any time suspend offers under the agreements or
terminate the agreements. As of June 30, 2010, the Trust had incurred $122 in
offering costs and sold no common stock under these agreements.
  11
 
 On May
19, 2010, the Trust’s stockholders approved the Education Realty Trust, Inc.
Employee Stock Purchase Plan (the “ESPP”). Pursuant to the ESPP, all
employees of the Trust are eligible to make periodic purchases of common stock
through payroll deductions.  Subject to the discretion of the compensation
committee of the board of directors, the purchase price per share of common
stock purchased by employees under the ESPP will be 85% of the fair market value
on the applicable purchase date.  The Trust has reserved 300,000 shares of
common stock for sale under the ESPP, and the compensation committee will serve
as the administrator of the ESPP. The ESPP will become effective as of July 1,
2010.
 
 On July
28, 2009, the Trust completed a follow-on common stock offering, selling
28,175,000 shares of the Trust’s common stock, including 3,675,000 shares
issued as a result of the exercise of the underwriters’ overallotment option in
full at closing, at a price of $4.35 per share to the public.  The offering
generated gross proceeds of $122,561.  The net proceeds to the Trust, after
the underwriting discount and other expenses of the offering were
approximately $116,133.
 
 Debt
premiums/discounts
 
 Differences
between the estimated fair value of debt and the principal value of debt assumed
in connection with student housing property acquisitions are amortized over the
term of the related debt as an offset to interest expense using the effective
interest method.
 
 Income
taxes
 
 The Trust
qualifies as a REIT under the Code. The Trust is generally not subject to
federal, state and local income taxes to the extent that it distributes at least
90% of its taxable income for each tax year to its stockholders. REITs are
subject to a number of organizational and operational requirements. If the Trust
fails to qualify as a REIT in any taxable year, the Trust will be subject to
federal, state and local income taxes (including any applicable alternative
minimum tax) on its taxable income and property and to federal income and excise
taxes on its undistributed income.
 
 The Trust
has elected to treat its management company, AOES, as a taxable REIT subsidiary
(“TRS”). The TRS is subject to federal, state and local income taxes. AOES
manages the Trust’s non-REIT activities which include management services and
development services, which are provided through AODC. Deferred tax assets and
liabilities are recognized based on the difference between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted tax rates in effect in the years in which those temporary differences
are expected to reverse.
 
 The Trust
had no unrecognized tax benefits as of June 30, 2010 and 2009.  As of June
30, 2010, the Trust did not expect to record any unrecognized tax
benefits.  The Trust, and its subsidiaries, file federal and state income
tax returns. As of June 30, 2010, open tax years generally include tax years for
2006, 2007, 2008 and 2009. The Trust’s policy is to include interest and
penalties related to unrecognized tax benefits in general and administrative
expenses.  At June 30, 2010 and 2009, the Trust had no interest or
penalties recorded related to unrecognized tax benefits.
 
 Noncontrolling
interests
 
 On
January 1, 2009, the Trust adopted the authoritative guidance issued by the FASB
that changed the accounting and reporting for noncontrolling interests. The
guidance established the accounting and reporting standards for ownership
interests in subsidiaries held by parties other than the parent, the amount of
consolidated net income attributable to the parent and to the noncontrolling
interests, changes in a parent’s ownership interest and the valuation of
retained noncontrolling equity investments when a subsidiary is
deconsolidated.  The guidance also established disclosure requirements to
clearly distinguish between the interests of the parent and the interests of the
noncontrolling owners. The units of limited partnership of the Operating
Partnership (“Operating Partnership Units”), units of limited partnership of
University Towers Operating Partnership, LP (“University Towers Operating
Partnership Units”)  and profits interest units (“PIU”) (see Note 9)
are now referred to as noncontrolling interests (formerly minority
interests).
  12
  In
connection with the adoption, the Trust also considered the guidance issued by
the FASB regarding the classification and measurement of redeemable
securities.  The Operating Partnership Units and the University Towers
Operating Partnership Units are redeemable at the option of the holder and
essentially have the same characteristics as common stock as they participate in
net income and distributions. Accordingly, the Trust determined that the
Operating Partnership Units and the University Towers Operating Partnership
Units met the requirements to be classified outside of permanent equity and are
therefore classified as redeemable noncontrolling interests in the accompanying
condensed consolidated balance sheets and net income attributable to
noncontrolling interests in the accompanying condensed consolidated statement of
operations.  The value of redeemable noncontrolling interests is reported
at the greater of fair value or historical cost at the end of each reporting
period.
  The PIUs
were determined to be noncontrolling interests that were not redeemable and
accordingly these amounts were reclassified to equity in the accompanying
condensed consolidated balance sheets and statements of changes in equity. 
The PIU holder’s share of income or loss is reported in the accompanying
condensed consolidated statements of operations as net income attributable to
noncontrolling interests. During the three months ended June 30, 2010, all of
the outstanding PIUs were redeemed by the Trust for $167 of cash and 50,826
shares of common stock (see Note 9).
 
 Earnings
per share
 
 Basic
earnings per share is calculated by dividing net earnings available to shares of
common stock by weighted average shares of common stock outstanding. Diluted
earnings per share is calculated similarly, except that it includes the dilutive
effect of the assumed exercise of potentially dilutive securities. Beginning
January 1, 2009, the Trust adopted the authoritative guidance regarding the
determination of whether certain instruments are participating securities. 
All unvested share-based payment awards that contain nonforfeitable rights to
dividends or dividend equivalents are to be included in the computation of
earnings per share under the two-class method.  This resulted in shares of
unvested restricted stock being included in the computation of basic earnings
per share for all periods presented. The adoption did not have a material impact
on the condensed consolidated financial statements.
 
 As of
June 30, 2010, the following potentially dilutive securities were outstanding
but were not included in the computation of diluted earnings per share because
the effects of their inclusion would be anti-dilutive:
 
 2010Operating
      Partnership units
                    
                    
                    903,738University
      Towers Operating Partnership units
                    
                    
                    207,257Total
      potentially dilutive securities
                    
                    
                    1,110,995
 
 A
reconciliation of the numerators and denominators for the basic and diluted
earnings per share computation is not presented, as the Trust reported a loss
from continuing operations for the three and six months ended June 30, 2010, and
therefore the effect of the inclusion of all potentially dilutive securities
would be anti-dilutive when computing diluted earnings per share; thus, the
computation for both basic and diluted earnings per share is the
same.
 
 The
following reconciles the basic and diluted weighted average shares for the three
and six months ended June 30, 2009:
 
 Three months
                  
                  
                  Six monthsended June 30,
                  
                  
                  ended June 30,2009
                  
                  
                  2009Basic
      weighted average common shares outstanding
                  
                  
                  28,520,344
                  
                  
                  
                  28,518,430Operating
      Partnership units
                  
                  
                  913,738
                  
                  
                  
                  913,738University
      Towers Operating Partnership units
                  
                  
                  207,257
                  
                  
                  
                  207,257Diluted
      weighted average common shares outstanding
                  
                  
                  29,641,339
                  
                  
                  
                  29,639,425
  13
 
 Goodwill
and other intangible assets
 
 Goodwill
is tested annually for impairment as of December 31, and is tested for
impairment more frequently if events and circumstances indicate that the assets
might be impaired. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset’s fair value. The accumulated impairment loss
recorded by the Trust as of December 31, 2008 is $388. No additional impairment
has been recorded through June 30, 2010. The carrying value of goodwill was
$3,070 at June 30, 2010 and December 31, 2009, of which $2,149 was recorded on
the management services segment and $921 was recorded on the development
consulting services segment.  Goodwill is not subject to
amortization.  Other intangible assets generally include in-place leases
and management contracts acquired in connection with acquisitions and are
amortized over the estimated life of the lease/contract term. There were no
other intangible assets at June 30, 2010 and $3 at December 31,
2009.
 
 Comprehensive
income
 
 The Trust
follows the authoritative guidance issued by the FASB relating to the reporting
and display of comprehensive income and its components. For all periods
presented, comprehensive income is equal to net income.
 
 Revenue
recognition
 
 The Trust
recognizes revenue related to leasing activities at the student housing
communities owned by the Trust, management fees related to managing third-party
student housing communities, development consulting fees related to the general
oversight of third-party student housing development and operating expense
reimbursements for payroll and related expenses incurred for third-party student
housing communities managed by the Trust.
 
 Student housing leasing revenue— Student housing leasing revenue is comprised of all activities related
to leasing and operating the student housing communities and includes revenues
from leasing apartments by the bed, food services, parking lot rentals and
providing certain ancillary services. This revenue is reflected in student
housing leasing revenue in the accompanying condensed consolidated statements of
operations. Students are required to execute lease contracts with payment
schedules that vary from annual to monthly payments. Generally, the Trust
requires each executed leasing contract to be accompanied by a signed parental
guarantee. Receivables are recorded when billed. Revenues and related lease
incentives and nonrefundable application and service fees are recognized on a
straight-line basis over the term of the contracts. At certain student housing
facilities, the Trust offers parking lot rentals to the tenants. The related
revenues are recognized on a straight-line basis over the term of the related
agreement.
 
 Third-party development services
revenue— The Trust provides development consulting services in an agency
capacity with third parties whereby the fee is determined based upon the total
construction costs. Total fees vary from 3-5% of the total estimated costs, and
the Trust typically receives a portion of the fees up front. These fees,
including the up-front fee, are recognized using the percentage of completion
method in proportion to the contract costs incurred by the owner over the course
of construction of the respective projects.  Occasionally, the development
consulting contracts include a provision whereby the Trust can participate in
project savings resulting from successful cost management efforts. These
revenues are recognized once all contractual terms have been satisfied and no
future performance requirements exist. This typically occurs after construction
is complete.  For the six months ended June 30, 2010 and 2009, there was no
revenue recognized related to cost savings agreements on development
projects.
 
 Third-party management services
revenue— The Trust enters into management contracts to manage
third-party student housing facilities. Management revenues are recognized when
earned in accordance with each management contract. Incentive management fees
are recognized when the incentive criteria have been met.
 
 Operating expense reimbursements— The Trust pays certain payroll and related costs to operate third-party
student housing communities that are managed by the Trust. Under the terms of
the related management agreements, the third-party property owners reimburse
these costs. The amounts billed to the third-party owners are recognized as
revenue.
 
 Costs
related to third party development consulting services
 
 Costs
associated with the pursuit of development consulting contracts are expensed as
incurred, until such time that management has been notified of a contract award.
At such time, the reimbursable costs are recorded as receivables and are
reflected as other assets in the accompanying condensed consolidated balance
sheets.
  14
 
 Recent
accounting pronouncements
 
 In
May 2009, the FASB issued new authoritative guidance on subsequent
events.  The new guidance is intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued.
Specifically, this standard sets forth the period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.  This guidance is
effective for financial statements issued for fiscal years and interim periods
beginning after June 15, 2009 and is applied prospectively.  The Trust
adopted this authoritative guidance during the three months ended September 30,
2009. In February 2010, the FASB amended the authoritative guidance on
subsequent events to remove the requirement for SEC filers to disclose the date
through which an entity has evaluated subsequent events. The new guidance is
effective upon issuance and had no impact on the Trust’s consolidated financial
statements.
 
 In
June 2009, the FASB issued guidance to establish only two levels of GAAP,
authoritative and nonauthoritative. The FASB Accounting Standards Codification
(the “Codification”) is the source of authoritative, nongovernmental GAAP,
except for rules and interpretive releases of the SEC, which are sources of
authoritative GAAP for SEC registrants. All other nongrandfathered, non-SEC
accounting literature not included in the Codification is nonauthoritative. This
standard is effective for financial statements issued for fiscal years and
interim periods ending after September 15, 2009.  As the Codification
was not intended to change or alter existing GAAP, it did not have any impact on
the consolidated financial statements.
 
 In
June 2009, the FASB issued authoritative guidance to improve financial
reporting by enterprises involved with variable interest entities. The new
guidance is effective for financial statements issued for fiscal years beginning
after November 15, 2009, with early adoption prohibited. The adoption had
no impact on the Trust’s consolidated financial statements.
 
 In
January 2010, the FASB updated the authoritative guidance for accounting and
reporting for decreases in ownership of a subsidiary. The updated guidance
clarifies the scope of the guidance related to a decrease in ownership
provisions and expands the disclosures related to the deconsolidation of a
subsidiary or group of assets. The updated guidance is effective for financial
statements issued for fiscal years and interim periods beginning after December
15, 2009.  The adoption had no impact on the Trust’s consolidated financial
statements.
 
 3.
Investments in unconsolidated entities
 
 As of
June 30, 2010, the Trust had investments, directly or indirectly, in the
following active unconsolidated joint ventures, limited liability companies and
limited partnerships that are accounted for under the equity
method:
 
 •
              University
      Village-Greensboro LLC, a Delaware limited liability company, 25% owned by
      the Operating Partnership
 
 •
              WEDR
      Riverside Investors V, LLC, a Delaware limited liability company, 10%
      owned by the Operating Partnership
 
 •
              APF
      EDR, LP, a Delaware limited partnership, 10% owned by the Operating
      Partnership
 
 •
              APF
      EDR Food Services, LP, a Delaware limited partnership, 10% owned by the
      Operating Partnership
 
 •
              WEDR
      Stinson Investors V, LLC, a Delaware limited liability company, 10% owned
      by the Operating Partnership
 
 The
following is a summary of financial information for the Trust’s unconsolidated
joint ventures, limited liability companies and limited partnerships for the six
months ended June 30, 2010 and 2009:
 
 2010
                  
                  
                  2009Results
      of Operations:Revenues
                  
                  $
                  8,005
                  
                  
                  $
                  8,672Net
      income
                  
                  
                  230
                  
                  
                  
                  626Equity
      in earnings of unconsolidated entities
                  
                  $
                  86
                  
                  
                  $
                  146
  15
 
 These
entities primarily own collegiate student housing communities which are managed
by the Trust.  As of June 30, 2010 and December 31, 2009, the Trust’s
investment in unconsolidated entities totaled $1,348 and $1,450,
respectively.
 
 4.
Debt
 
 Revolving
credit facility
 
 On
November 20, 2009, the Operating Partnership entered into a Second Amended
and Restated Credit Agreement (the “Second Amended Revolver”). The Second
Amended Revolver amended and restated the existing secured revolving credit
facility dated March 30, 2006 (the “Amended Revolver”).  The previous
facility had a maximum availability of $100,000 and was scheduled to mature on
March 30, 2010.  The Second Amended Revolver has a maximum availability of
$95,000 and within the first two years of the agreement may be expanded to a
total of $150,000 upon satisfaction of certain conditions.
 
 Availability
under the Second Amended Revolver is limited to a “borrowing base availability”
equal to the lesser of (i) 60% of the property asset value (as defined in
the agreement) of the properties securing the Second Amended Revolver and
(ii) the loan amount which would produce a debt service coverage ratio of
no less than 1.40. As of June 30, 2010, our borrowing base was $43,364, we had
no amounts outstanding under the Second Amended Revolver and we had a letter of
credit outstanding of $1,500 (see Note 6); thus, our remaining borrowing base
availability was $41,864.
 
 The Trust
serves as the guarantor for any funds borrowed by the Operating Partnership
under the Second Amended Revolver. Additionally, the Second Amended Revolver is
secured by a cross-collateralized, first mortgage lien on five otherwise
unmortgaged properties. The Second Amended Revolver matures on November 20,
2012, provided that the Operating Partnership may extend the maturity date for
one year subject to certain conditions. The interest rate per annum applicable
to the Second Amended Revolver is, at the Operating Partnership’s option, equal
to a base rate or London InterBank Offered Rate (“LIBOR”) plus an applicable
margin based upon our leverage.
 
 The
Second Amended Revolver contains customary affirmative and negative covenants
and contains financial covenants that, among other things, require the Trust and
its subsidiaries to maintain certain minimum ratios of “EBITDA” (earnings before
payment or charges of interest, taxes, depreciation, amortization or
extraordinary items) as compared to interest expense and total fixed charges.
The financial covenants also include consolidated net worth and leverage ratio
tests. As of June 30, 2010, the Trust was in compliance with all debt
covenants.
 
 The Trust
is prohibited from making distributions unless either of the following
conditions is met: (a) after giving effect to the distribution, the total
leverage ratio is less than or equal to 65% prior to November 20, 2012, and less
than or equal to 60% thereafter; or (b) the distribution, when considered
along with all other distributions for the last 3 quarters, does not exceed 90%
of funds from operations for the applicable period.
 
 During
the year ended December 31, 2009, the Trust used $30,600 of the proceeds
received in connection with the follow-on common stock offering that was
conducted in July 2009 (see Note 2) to repay the outstanding balance of the
Amended Revolver.
 
 Mortgage
and construction debt
 
 At June
30, 2010, the Trust had outstanding mortgage and construction indebtedness of
$398,645 (excluding unamortized debt premium of $598). $23,895 relates to
construction debt that is disclosed below and $132,295 pertains to outstanding
mortgage debt that is secured by the underlying student housing properties or
leaseholds bearing interest at fixed rates ranging from 4.92% to 6.97%. 
The remaining $242,455 of the outstanding mortgage indebtedness relates to the
Fannie Mae master secured credit facility that the Trust entered into on
December 31, 2008 and expanded on December 2, 2009 (the “Master Secured Credit
Facility”).  $48,975 of the outstanding amount under the Master Secured
Credit Facility bears interest at variable rates based on the 30-day LIBOR plus
an applicable margin (3.67%). The remaining outstanding balance of $193,480
bears interest at a weighted average fixed rate of 5.88%.
  16
 
 In order
to hedge the interest rate risk associated with the variable rate loans under
the Master Secured Credit Facility, the Operating Partnership purchased an
interest rate cap from the Royal Bank of Canada on December 22, 2008 for
$120.  The notional amount of the cap is $49,874, the cap will terminate on
December 31, 2013 and the cap rate is 7.0% per annum.  The Operating
Partnership has chosen not to designate the cap as a hedge and will recognize
all gains or losses associated with this derivative instrument in
earnings.  At June 30, 2010 and December 31, 2009, the cap had a value of
$55 and $286, respectively, and is classified in other assets in the
accompanying condensed consolidated balance sheets.
 
 At June
30, 2010, we had borrowed $10,759 and $4,310 on construction loans with
availability of $11,000 and $12,285, respectively, related to the development of
a wholly owned student apartment community near Southern Illinois University
(Carbondale) (see Note 7). The loans bear interest equal to LIBOR plus 110 and
200 basis point margins, respectively, and were interest only through June 14,
2010. On June 14, 2010, the Trust paid down $5,013 of the outstanding
construction debt and extended the maturity date until June 28, 2012. Going
forward, annually, a debt service coverage ratio calculated on a rolling
12 months basis, of not less than 1.25 to 1, must be maintained with
principal and interest being repaid on a monthly basis.
 
 At June
30, 2010, the Trust had $8,826 outstanding on a $14,300 construction loan
related to the development of a wholly-owned student apartment community at
Syracuse University (see Note 7). The loan bears interest equal to LIBOR plus a
110 basis point margin and is interest only through September 29, 2011.
Commencing with the quarter ended June 30, 2011, and annually thereafter, a
debt service coverage ratio calculated on a rolling 12 month basis, of not
less than 1.25 to 1, must be maintained in order to extend the loan until
September 29, 2013, with principal and interest being repaid on a monthly
basis.
 
 The
scheduled maturities of outstanding mortgage and construction indebtedness at
June 30, 2010 are as follows:
 
 Fiscal
      Year Ending2010
      (6 months ending December 31, 2010)
                  
                  $
                  2,1662011
                  
                  
                  13,3572012
                  
                  
                  83,0802013
                  
                  
                  33,0282014
                  
                  
                  100,115Thereafter
                  
                  
                  166,899Total
                  
                  
                  398,645Unamortized
      debt premium/discounts
                  
                  
                  598Outstanding
      at June 30, 2010, net of unamortized premiums
                  
                  $
                  399,243
 
 At June
30, 2010, the outstanding mortgage and construction debt had a weighted average
interest rate of 5.38% and carried a weighted average term to maturity of
4.71 years.
 
 5.
Segments
 
 The Trust
defines business segments by their distinct customer base and service provided.
The Trust has identified three reportable segments: student housing leasing,
development-consulting services and management services. Management evaluates
each segment’s performance based on pretax income and on net operating income,
which is defined as income before depreciation, amortization, impairment losses,
interest expense (income), gains (losses) on extinguishment of debt, equity in
earnings of unconsolidated entities, and noncontrolling interests. The
accounting policies of the reportable segments are the same as those described
in the summary of significant accounting policies. Intercompany fees are
reflected at the contractually stipulated amounts. Discontinued operations are
not included in segment reporting as management addresses these items on a
corporate level. The following table represents segment information for the six
months ended June 30, 2010 and 2009:
  17
 
 Six
      Months Ended June 30, 2010
                  
                  
                  Six Months
      Ended June 30, 2009Student
                  
                  
                  Development
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  Student
                  
                  
                  DevelopmentHousing
                  
                  
                  Consulting
                  
                  
                  Management
                  
                  
                  
                  
                  
                  
                  
                  
                  Housing
                  
                  
                  Consulting
                  
                  
                  ManagementLeasing
                  
                  
                  Services
                  
                  
                  Services
                  
                  
                  Eliminations
                  
                  
                  Total
                  
                  
                  Leasing
                  
                  
                  Services
                  
                  
                  Services
                  
                  
                  Eliminations
                  
                  
                  TotalSegment
      revenues:Student
      housing leasing revenue
                  
                  $
                  58,045
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  58,045
                  
                  
                  $
                  57,280
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  57,280Third-party
      development consulting services
                  
                  
                  —
                  
                  
                  
                  1,341
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,341
                  
                  
                  
                  —
                  
                  
                  
                  2,716
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,716Third-party
      management services
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,573
                  
                  
                  
                  —
                  
                  
                  
                  1,573
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,632
                  
                  
                  
                  —
                  
                  
                  
                  1,632Intersegment
      revenues
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,196
                  
                  
                  
                  (2,196
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,048
                  
                  
                  
                  2,186
                  
                  
                  
                  (3,234
                  )
                  
                  
                  —Operating
      expense reimbursements
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  3,865
                  
                  
                  
                  3,865
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  4,226
                  
                  
                  
                  4,226Total
      segment revenues
                  
                  
                  58,045
                  
                  
                  
                  1,341
                  
                  
                  
                  3,769
                  
                  
                  
                  1,669
                  
                  
                  
                  64,824
                  
                  
                  
                  57,280
                  
                  
                  
                  3,764
                  
                  
                  
                  3,818
                  
                  
                  
                  992
                  
                  
                  
                  65,854Segment
      operating expenses:Student
      housing leasing operations
                  
                  
                  26,646
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  26,646
                  
                  
                  
                  26,099
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  26,099General
      and administrative
                  
                  
                  —
                  
                  
                  
                  1,620
                  
                  
                  
                  3,917
                  
                  
                  
                  —
                  
                  
                  
                  5,537
                  
                  
                  
                  —
                  
                  
                  
                  1,481
                  
                  
                  
                  3,679
                  
                  
                  
                  (81
                  )
                  
                  
                  5,079Intersegment
      expenses
                  
                  
                  2,196
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (2,196
                  )
                  
                  
                  —
                  
                  
                  
                  2,186
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (2,186
                  )
                  
                  
                  —Reimbursable
      operating expenses
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  3,865
                  
                  
                  
                  3,865
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  4,226
                  
                  
                  
                  4,226Total
      segment operating expenses
                  
                  
                  28,842
                  
                  
                  
                  1,620
                  
                  
                  
                  3,917
                  
                  
                  
                  1,669
                  
                  
                  
                  36,048
                  
                  
                  
                  28,285
                  
                  
                  
                  1,481
                  
                  
                  
                  3,679
                  
                  
                  
                  1,959
                  
                  
                  
                  35,404Net
      operating income (loss)
                  
                  
                  29,203
                  
                  
                  
                  (279
                  )
                  
                  
                  (148
                  )
                  
                  
                  —
                  
                  
                  
                  28,776
                  
                  
                  
                  28,995
                  
                  
                  
                  2,283
                  
                  
                  
                  139
                  
                  
                  
                  (967
                  )
                  
                  
                  30,450Nonoperating
      expenses(1)
                  
                  
                  25,955
                  
                  
                  
                  (48
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  25,907
                  
                  
                  
                  25,796
                  
                  
                  
                  (42
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  25,754Income
      (loss) before equity in earnings (losses) of unconsolidated entities,
      income taxes and discontinued operations
                  
                  
                  3,248
                  
                  
                  
                  (231
                  )
                  
                  
                  (148
                  )
                  
                  
                  —
                  
                  
                  
                  2,869
                  
                  
                  
                  3,199
                  
                  
                  
                  2,325
                  
                  
                  
                  139
                  
                  
                  
                  (967
                  )
                  
                  
                  4,696Equity
      in earnings (losses) of unconsolidated entities
                  
                  
                  86
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  86
                  
                  
                  
                  148
                  
                  
                  
                  (2
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  146Income
      (loss) before income taxes and discontinued operations(2)
                  
                  $
                  3,334
                  
                  
                  $
                  (231
                  )
                  
                  $
                  (148
                  )
                  
                  $
                  —
                  
                  
                  $
                  2,955
                  
                  
                  $
                  3,347
                  
                  
                  $
                  2,323
                  
                  
                  $
                  139
                  
                  
                  $
                  (967
                  )
                  
                  $
                  4,842Total
      segment assets, as of June 30, 2010 and December 31, 2009
    (3)
                  
                  $
                  759,134
                  
                  
                  $
                  5,362
                  
                  
                  $
                  4,371
                  
                  
                  $
                  —
                  
                  
                  $
                  768,867
                  
                  
                  $
                  766,655
                  
                  
                  $
                  3,742
                  
                  
                  $
                  5,535
                  
                  
                  $
                  —
                  
                  
                  $
                  775,932
 
 (1)
              Nonoperating
      expenses include interest expense, interest income, gains (losses) on the
      extinguishment of debt, amortization of deferred financing costs,
      depreciation, amortization of intangibles and impairment losses on assets.
      Certain expenses, which are classified as operating expenses in the
      condensed consolidated financial statements, are classified as
      nonoperating expenses for presentation purposes above based on how
      management evaluates segment operating
  performance.
 
 (2)
              The
      following is a reconciliation of the reportable segments’
      income before income taxes and discontinued operations to the
      Trust’s consolidated income (loss) before income taxes and discontinued
      operations for the six months ended June
30:
  18
 
 2010
                    
                    
                    2009Income
      before income taxes and discontinued operations for reportable
      segments
                    
                    $
                    2,955
                    
                    
                    $
                    4,842Other
      unallocated corporate expenses
                    
                    
                    (3,352
                    )
                    
                    
                    (3,313
                    )Income
      (loss) before income taxes and discontinued operations
                    
                    $
                    (397
                    )
                    
                    $
                    1,529
 
 (3)
              The
      decrease in segment assets related to student housing leasing is primarily
      related to depreciation.  The increase in segment assets related to
      development consulting services is primarily due to increases in the
      receivables for reimbursable project costs of $1,693 related to the
      developments at East Stroudsburg University, Mansfield University of
      Pennsylvania and Johns Hopkins University. These increases were offset by
      collections of reimbursable project costs of $869 related to the
      developments at Colorado State University- Pueblo and SUNY College of
      Environmental Science and Forestry. Additionally, development fee
      receivables increased $634 related to the developments at Indiana
      University of Pennsylvania and Colorado State University-
      Pueblo.
 
 The
following table represents segment information for the three months ended June
30, 2010 and 2009:
 
 Three
      Months Ended June 30, 2010
                    
                    
                    Three
      Months Ended June 30, 2009Student
                    
                    
                    Development
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    Student
                    
                    
                    DevelopmentHousing
                    
                    
                    Consulting
                    
                    
                    Management
                    
                    
                    
                    
                    
                    
                    
                    
                    Housing
                    
                    
                    Consulting
                    
                    
                    ManagementLeasing
                    
                    
                    Services
                    
                    
                    Services
                    
                    
                    Eliminations
                    
                    
                    Total
                    
                    
                    Leasing
                    
                    
                    Services
                    
                    
                    Services
                    
                    
                    Eliminations
                    
                    
                    TotalSegment
      revenues:Student
      housing leasing revenue
                    
                    $
                    28,394
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    28,394
                    
                    
                    $
                    27,967
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    27,967Third-party
      development consulting services
                    
                    
                    —
                    
                    
                    
                    648
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    648
                    
                    
                    
                    —
                    
                    
                    
                    1,259
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,259Third-party
      management services
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    707
                    
                    
                    
                    —
                    
                    
                    
                    707
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    723
                    
                    
                    
                    —
                    
                    
                    
                    723Intersegment
      revenues
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,065
                    
                    
                    
                    (1,065
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    574
                    
                    
                    
                    1,061
                    
                    
                    
                    (1,635
                    )
                    
                    
                    —Operating
      expense reimbursements
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,957
                    
                    
                    
                    1,957
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,036
                    
                    
                    
                    2,036Total
      segment revenues
                    
                    
                    28,394
                    
                    
                    
                    648
                    
                    
                    
                    1,772
                    
                    
                    
                    892
                    
                    
                    
                    31,706
                    
                    
                    
                    27,967
                    
                    
                    
                    1,833
                    
                    
                    
                    1,784
                    
                    
                    
                    401
                    
                    
                    
                    31,985Segment
      operating expenses:Student
      housing leasing operations
                    
                    
                    13,208
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    13,208
                    
                    
                    
                    12,929
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    12,929General
      and administrative
                    
                    
                    —
                    
                    
                    
                    842
                    
                    
                    
                    1,811
                    
                    
                    
                    —
                    
                    
                    
                    2,653
                    
                    
                    
                    —
                    
                    
                    
                    749
                    
                    
                    
                    1,711
                    
                    
                    
                    (44
                    )
                    
                    
                    2,416Intersegment
      expenses
                    
                    
                    1,065
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,065
                    )
                    
                    
                    —
                    
                    
                    
                    1,061
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,061
                    )
                    
                    
                    —Reimbursable
      operating expenses
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,957
                    
                    
                    
                    1,957
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,036
                    
                    
                    
                    2,036Total
      segment operating expenses
                    
                    
                    14,273
                    
                    
                    
                    842
                    
                    
                    
                    1,811
                    
                    
                    
                    892
                    
                    
                    
                    17,818
                    
                    
                    
                    13,990
                    
                    
                    
                    749
                    
                    
                    
                    1,711
                    
                    
                    
                    931
                    
                    
                    
                    17,381Net
      operating income (loss)
                    
                    
                    14,121
                    
                    
                    
                    (194
                    )
                    
                    
                    (39
                    )
                    
                    
                    —
                    
                    
                    
                    13,888
                    
                    
                    
                    13,977
                    
                    
                    
                    1,084
                    
                    
                    
                    73
                    
                    
                    
                    (530
                    )
                    
                    
                    14,604Nonoperating
      expenses(1)
                    
                    
                    12,963
                    
                    
                    
                    (25
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    12,938
                    
                    
                    
                    12,367
                    
                    
                    
                    (31
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    12,336Income
      (loss) before equity in earnings (losses) of unconsolidated entities,
      income taxes and discontinued operations
                    
                    
                    1,158
                    
                    
                    
                    (169
                    )
                    
                    
                    (39
                    )
                    
                    
                    —
                    
                    
                    
                    950
                    
                    
                    
                    1,610
                    
                    
                    
                    1,115
                    
                    
                    
                    73
                    
                    
                    
                    (530
                    )
                    
                    
                    2,268Equity
      in earnings (losses) of unconsolidated entities
                    
                    
                    7
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    7
                    
                    
                    
                    48
                    
                    
                    
                    (2
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    46Income
      (loss) before income taxes and discontinued operations(2)
                    
                    $
                    1,165
                    
                    
                    $
                    (169
                    )
                    
                    $
                    (39
                    )
                    
                    $
                    —
                    
                    
                    $
                    957
                    
                    
                    $
                    1,658
                    
                    
                    $
                    1,113
                    
                    
                    $
                    73
                    
                    
                    $
                    (530
                    )
                    
                    $
                    2,314
  19
 
 (1)
              Nonoperating
      expenses include interest expense, interest income, gains (losses) on the
      extinguishment of debt, amortization of deferred financing costs,
      depreciation, amortization of intangibles and impairment losses on assets.
      Certain expenses, which are classified as operating expenses in the
      condensed consolidated financial statements, are classified as
      nonoperating expenses for presentation purposes above based on how
      management evaluates segment operating
  performance.
 
 (2)
              The
      following is a reconciliation of the reportable segments’ income before
      income taxes and discontinued operations to the Trust’s consolidated
      income (loss) before income taxes and discontinued operations for the
      three months ended June 30:
 
 2010
                      
                      
                      2009Income
      before income taxes and discontinued operations for reportable
      segments
                      
                      $
                      957
                      
                      
                      
                      2,314Other
      unallocated corporate expenses
                      
                      
                      (1,661
                      )
                      
                      
                      (1,632
                      )Income
      (loss) before income taxes and discontinued operations
                      
                      $
                      (704
                      )
                      
                      
                      682
 
 6.
Commitments and contingencies
 
 In
connection with the acquisition of certain of the Trust’s properties, the
previous owner disclosed to the Trust in 2004 that, in June 2001, the United
States Department of Justice (“DOJ”) had notified the previous owner of an
on-going investigation regarding possible violations of the Americans with
Disabilities Act of 1990 (“ADA”) and the Fair Housing Amendments Act of 1988
(“FHAA”). The previous owner disclosed to us in 2004 that DOJ had reviewed the
property plans for certain of its properties, that DOJ had not issued a report
regarding its review, that in October 2002, DOJ had indicated to the previous
owner that the investigation was being delayed for an undetermined period of
time, and that DOJ had not contacted the previous owner between 2002 and August
2004. In February 2010, DOJ served a subpoena on the Trust seeking access to one
of the purchased properties in connection with a complaint filed by DOJ in March
2009 against the previous owner.  On April 12, 2010, the DOJ inspected the
property and found violations in the construction and design of the property as
shown in the DOJ’s subsequent report filed with the court on May 12,
2010. At this stage, the DOJ has represented that no EDR entity is a target
of its investigation and that its action is limited to design and construction
defects created by the previous owner in the original construction of the
property. The investigation has not been resolved and, at this point, no
conclusion can be reached regarding what will be required to conclude it or
whether it will result in a dispute or legal proceedings between the Trust and
DOJ or the previous owner. Noncompliance with the ADA and the FHAA could result
in the imposition of injunctive relief, fines, awards of damages to private
litigants or additional capital expenditures to remedy such noncompliance. The
Trust is unable to predict the outcome of the DOJ’s investigation.
 
 The
Operating Partnership entered into a letter of credit agreement in conjunction
with the closing of the acquisition of a student housing community at the
University of Florida. The letter of credit remains outstanding in the amount of
$1,500 at June 30, 2010 and is secured by the Second Amended
Revolver.
 
 On
May 10, 2006, the Operating Partnership guaranteed $23,200 of construction
debt held by University Village-Greensboro LLC (“LLC”) in order to receive a 25%
ownership stake in the venture with College Park Apartments. Construction
was completed, and the student housing community was occupied in August
2007.  The construction loan was refinanced in June of 2010 and the
Operating Partnership no longer guarantees the debt.  In October of 2007,
the Operating Partnership entered into a note receivable with the LLC in the
amount of $845.   On October 30, 2008, the LLC borrowed an additional
$1,200, which was also guaranteed by the Operating Partnership that was repaid
on November 10, 2009. The Operating Partnership loaned the LLC an additional
$1,200 in order to repay this loan by increasing the note receivable due to the
Operating Partnership to $2,021 and amending the maturity date to December 31,
2019.  At December 31, 2009, the note had an outstanding balance of $2,021,
is reflected in other assets in the accompanying condensed consolidated balance
sheet and was subordinated to the construction debt held by the LLC.  In
June of 2010, the note receivable was repaid in full when the construction loan
held by the LLC was refinanced as discussed above.
  20
 
 As owners
and operators of real estate, environmental laws impose ongoing compliance
requirements on the Trust. The Trust is not aware of any environmental matters
or liabilities with respect to the student housing communities that would have a
material adverse effect on the Trust’s consolidated financial condition or
results of operations.
 
 In the
normal course of business, the Trust is subject to claims, lawsuits and legal
proceedings. While it is not possible to ascertain the ultimate outcome of such
matters, in management’s opinion, the liabilities, if any, in excess of amounts
provided or covered by insurance, are not expected to have a material adverse
effect on our financial position, results of operations or
liquidity.
 
 Under the
terms of the limited partnership agreement of University Towers Operating
Partnership, LP, so long as the contributing owners of such property hold at
least 25% of the University Towers Partnership Units, the Trust has agreed to
maintain certain minimum amounts of debt on the property to avoid triggering
gain to the contributing owners. If the Trust fails to do this, the Trust must
repay the contributing owners the amount of taxes they incur.
 
 Under the
terms of the purchase agreement with Place Properties, L.P., the Trust remains a
party to a tax indemnification agreement whereby a payment could be required to
be made to the former owner if any of the Place-communities are sold within five
years of the purchase date.  The contingency expires in January
2011.
 
 After
being awarded a development consulting contract, the Trust will enter into
predevelopment consulting contracts with educational institutions to develop
student housing communities on their behalf.  The Trust will enter
into reimbursement agreements that provide for the Trust to be reimbursed for
the predevelopment costs incurred prior to the institution’s governing body
formally approving the final development contract.  At June 30, 2010 and
December 31, 2009, the Trust had reimbursable predevelopment costs of
$2,905 and $1,563, respectively, which are reflected in other assets in the
accompanying condensed consolidated balance sheets.
 
 7.
Acquisition and development of real estate investments
 
 On
June 28, 2007, the Trust acquired land in Carbondale, Illinois for $1,099
in order to develop a wholly owned student apartment community near Southern
Illinois University. After the acquisition, the Trust incurred an additional
$20,580 and $11,797 in costs to develop the first and second phases of the
development which opened in August of 2008 and 2009, respectively.
 
 During
2008, the Trust also began development of a wholly-owned student apartment
community located on the campus of Syracuse University. The Trust incurred
$25,792 in costs to develop the community which opened in August of 2009. 
In addition, the Trust owns and manages the community under a long-term ground
lease from Syracuse University.
 
 All costs
related to the completed developments discussed above are classified in student
housing properties, net in the accompanying condensed consolidated balance
sheets.
 
 8.
Disposition of real estate investments and discontinued operations
 
 On
April 7, 2009, the Trust sold the College Station student housing community
for a purchase price of $2,550.  The Trust received proceeds of $250 and a
note receivable of $2,300. The note was interest only and accrued interest
at a rate of 3% per annum through August 31, 2009 and matures on December 31,
2010 (the option to extend from December 31, 2009 to December 31, 2010 was
exercised in September 2009). Beginning on September 1, 2009, the note accrues
interest at a rate of 6% per annum and is payable in monthly installments
through maturity. All unpaid principal and interest is due at maturity. However,
if no default exists at the maturity date, the note may be extended to June 30,
2011. The note would remain interest only at a rate of 6% per annum payable in
monthly installments through December 31, 2010; thereafter, payments of
principal and interest (at a rate of 6% per annum) would be made on a monthly
basis. Any unpaid principal and interest would be due in full on June 30,
2011.  The resulting net gain on disposition of approximately $374 has been
deferred against the note receivable.
  21
  The
results of operations of College Station are reflected as discontinued
operations in the accompanying condensed consolidated statement of operations
for the three and six months ended June 30, 2009. The following table summarizes
income/(loss) from discontinued operations, net of noncontrolling interests, for
the three and six months ended June 30, 2009:
  Three months
                  
                  
                  Six monthsEnded June 30,
                  
                  
                  Ended June 30,2009
                  
                  
                  2009Student
      housing leasing revenue
                  
                  $
                  10
                  
                  
                  $
                  131Student
      housing leasing operating expenses
                  
                  
                  12
                  
                  
                  
                  124Depreciation
      and amortization
                  
                  
                  —
                  
                  
                  
                  25Loss
      from discontinued operations attributable to Education Realty Trust,
      Inc.
                  
                  $
                  (2
                  )
                  
                  $
                  (18
                  )
  9.
Incentive plan
 
 The Trust
adopted the Education Realty Trust, Inc. 2004 Incentive Plan (the “Plan”)
effective January 31, 2005. The Plan provides for the grant of stock options,
restricted stock, restricted stock units, stock appreciation rights, other
stock-based incentive awards and PIUs to employees, directors and other key
persons providing services to the Trust.  As of June 30, 2010, the Trust
had 648,000 of its common stock reserved for issuance pursuant to the Plan,
subject to adjustments for changes in the Trust’s capital structure, including
share splits, dividends and recapitalizations. The number of shares reserved
under the Plan is also subject to an annual adjustment, beginning on
January 1, 2006, so that the total number of shares reserved under the Plan
is equal to 4% of the aggregate number of shares outstanding on the last
day of the preceding fiscal year; provided that such annual increase generally
may not exceed 80,000 shares.
 
 A
restricted stock award is an award of the Trust’s common stock that is subject
to restrictions on transferability and other restrictions as the Trust’s
compensation committee determines in its sole discretion on the date of grant.
The restrictions may lapse over a specified period of employment or the
satisfaction of pre-established criteria as our compensation committee may
determine. Except to the extent restricted under the award agreement, a
participant awarded restricted shares will have all of the rights of a
stockholder as to those shares, including, without limitation, the right to vote
and the right to receive dividends or distributions on the shares. Restricted
stock is generally taxed at the time of vesting. At June 30, 2010 and
December 31, 2009, unearned compensation related to restricted stock
totaled $1,042 and $40, respectively, and will be recorded as expense over the
applicable vesting period. The value is determined based on the market value of
the Trust’s common stock on the grant date. During each of the six months ended
June 30, 2010 and 2009, compensation expense of $212 and $302, respectively, was
recognized in the accompanying condensed consolidated statements of operations,
related to the vesting of restricted stock.
 
 On
January 11, 2010, the Trust issued 50,000 shares of restricted common stock to
an executive as an inducement to enter into an employment agreement with the
Trust.  The restricted stock will lapse ratably over five years as long as
the executive remains employed with the Trust. The award was granted outside of
the Plan described above pursuant to Section 303A.08 of the New York Stock
Exchange Listed Company Manual.  Additionally, on April 13, 2010, the Trust
issued 30,000 shares of restricted common stock to an executive pursuant to the
Plan discussed above.  The restrictions on the shares will lapse ratably
over 5 years as long as the executive remains employed by the
Trust.
 
 On March
11, 2010, the Trust adopted the 2010 Long-Term Incentive Plan (the
“LTIP”).  The purpose of the LTIP is to attract, retain and motivate the
executive officers and certain key employees of the Trust and to promote the
long-term growth and profitability of the Trust.  On April 13, 2010, the
Trust issued 136,000 shares of time vested restricted stock and 204,000
performance vested restricted stock units (“RSUs”) to executives and key
employees under the LTIP pursuant to the Plan described above.  The
restricted stock will vest ratably over three years as long as the participants
remain employed with the Trust.  The RSUs will vest based upon the Trust’s
achievement of total stockholder returns at specified levels as compared to the
average total stockholder returns of a peer group of companies over the period
of time beginning January 1, 2010 to January 1, 2013 (the “Performance Period”).
At the end of the Performance Period, the compensation committee of the Board
will determine the level and the extent to which the performance goal was
achieved. RSUs that satisfy the performance goal will be converted into
fully-vested shares of the Trust’s common stock and taxed at the time of
vesting.  Prior to vesting, the participants are not eligible to vote or
receive dividends or distributions on the RSUs. At June 30, 2010, unearned
compensation related to RSUs totaled $586 and will be recorded as expense over
the applicable vesting period. The value was determined using a Monte Carlo
simulation technique. During the six months ended June 30, 2010, compensation
expense of $117 was recognized in the accompanying condensed consolidated
statement of operations, related to the vesting of RSUs.
  22
 
 PIUs were
units in a limited liability company controlled by the Trust that held a special
class of partnership interests in the Operating Partnership.  On June 3,
2010, the Trust redeemed all of the outstanding PIUs for $167 cash and 50,826
shares of the Trust’s common stock.  For purposes of the Plan, each PIU was
deemed equivalent to an award of one share of the Trust’s common stock and
entitled the owner of such unit to receive the same quarterly per unit
distributions as one common unit of the Operating Partnership. PIUs did not
have full parity with Operating Partnership Units with respect to liquidating
distributions; therefore, the value of PIUs was less than the value of the
Trust’s common stock. The grant or vesting of PIUs was not a taxable transaction
to recipients. Conversely, we did not receive any tax deductions for
compensation expense from the granting of PIUs. PIUs are treated as
noncontrolling interests in the accompanying condensed consolidated financial
statements at an amount equal to the holders’ ownership percentage of the net
equity of the Operating Partnership.
 
 Total
noncash compensation cost recognized in general and administrative expense in
the accompanying condensed consolidated statements of operations for the six
months ended June 30, 2010 and 2009, was $382 and $353, respectively. 
Additionally during each of the six months ended June 30, 2010 and 2009, the
Trust issued 4,000 shares of common stock to an executive officer pursuant to
the Plan and 30,000 shares to its independent directors pursuant to the
Plan.
 
 A summary
of the stock-based incentive plan activity as of and for the six months ended
June 30, 2010 is as follows:
 
 StockRSUs
                                                    
                                                    
                                                    PIU’s
                                                    
                                                    
                                                    Awards (1)
                                                    
                                                    
                                                    TotalOutstanding
      at December 31, 2009
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    275,000
                                                    
                                                    
                                                    
                                                    216,000
                                                    
                                                    
                                                    
                                                    491,000Granted
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    54,000
                                                    
                                                    
                                                    
                                                    54,000Forfeited
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (62,500
                                                    )
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (62,500
                                                    )Outstanding
      at March 31, 2010
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    212,500
                                                    
                                                    
                                                    
                                                    270,000
                                                    
                                                    
                                                    
                                                    482,500Granted
                                                    
                                                    
                                                    204,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    246,826
                                                    
                                                    
                                                    
                                                    450,826Redeemed
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (192,500
                                                    )
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (192,500
                                                    )Forfeited
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (20,000
                                                    )
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    (20,000
                                                    )Outstanding
      at June 30, 2010
                                                    
                                                    
                                                    204,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    516,826
                                                    
                                                    
                                                    
                                                    720,826Vested
      at June 30, 2010
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    276,496
                                                    
                                                    
                                                    
                                                    276,496
 
 (1)
              Includes
      restricted stock awards.
 
 10.
Subsequent events
 
 Our board
of directors declared a distribution of $0.05 per share of common stock for the
quarter ended on June 30, 2010. The distribution is payable on August 16, 2010
to stockholders of record at the close of business on July 30,
2010.
 
 On July
14, 2010, the Trust entered into definitive agreements for the development,
financing and management of a $60,000, 20-story, 572-bed graduate student
housing complex at the Science + Technology Park at Johns Hopkins Medical
Institute.  The Trust extended an $18,000 second mortgage loan to the
owner. This second mortgage loan has a thirty- year amortization and its
debt service is subordinated to that of the construction loan. In addition the
Trust has committed to provide a guarantee of repayment of a $42,000 third-party
construction loan for a fee if such is ultimately obtained.  The Trust has
also committed to fund the $42,000 construction loan if such financing cannot be
obtained from a third-party lender.  Accordingly, in the event that the
construction financing is not obtained from a third-party lender, the Trust
would provide the entire $60,000 necessary to finance the project. The project
will have a $2,500 annual reserve to fund any operating shortfalls. The second
mortgage loan and related debt service are the first at risk if such reserve is
not adequate to cover operating expenses and debt service on the construction
loan.
  23
 
 In July
2010, the University of Texas Board of Regents selected the Trust to be the
ground tenant to develop, own and manage a new high-rise apartment community
near the core of the University of Texas at Austin campus.  This will be
the Trust’s third wholly owned development and second project under the ONE
Plan.   As opposed to our third-party development services, all
exposure to risks and capital requirements for these developments remain with
the Trust.
 
 On August
1, 2010, the Trust leased the student housing community known as Collegiate
Village located in Macon, Georgia to Macon State College (“MSC”) for monthly
rent of $30 for a period of one year.  MSC will operate and manage the
property while the lease is in place.  MSC has the option to renew the
lease for one additional year or has the option to purchase the property for
$7,500 plus the cost of capital improvements made at the request of MSC. 
The purchase option can be exercised at any time between February 28, 2011 and
July 31, 2011.
  24
 
 Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
 
 (Dollars
in thousands, except selected property information and share data)
 
 The
following discussion should be read in conjunction with the financial statements
and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q
(“Report”) and the audited consolidated financial statements and notes thereto
and Management’s Discussion and Analysis of Financial Condition and Results of
Operations contained in our Annual Report on Form 10-K for the year ended
December 31, 2009. Certain statements contained in this Report 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 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, 2009 and “Part II, Item IA.-Risk Factors” below. 
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.
 
 All
references to “we,” “our,” “us,” “EDR,” “Trust” and the “Company” in this Report
mean Education Realty Trust, Inc. and its consolidated subsidiaries, except
where it is made clear that the term means only Education Realty Trust,
Inc.
 
 Overview
 
 We are a
self-managed and self-advised real estate investment trust (“REIT”) engaged in
the ownership, acquisition and management of high-quality collegiate student
housing communities. We also provide student housing development consulting
services to universities, charitable foundations and other third parties. We
believe that we are one of the largest private owners, developers and managers
of high-quality collegiate student housing communities in the United States in
terms of both total beds owned and under management.
 
 We earn
income from rental payments we receive as a result of our ownership of student
housing communities. We also earn income by performing property management
services and development consulting services for third parties through Allen
& O’Hara Education Services, Inc. (“AOES”) and Allen & O’Hara
Development Company, LLC (“AODC”), respectively. While we manage 100% of the
communities we own, we do not recognize any fee income from their management on
a consolidated basis. Furthermore, we do not recognize development fee income on
a consolidated basis for communities that are being developed for ownership by
the Trust.
 
 We have
elected to be taxed as a REIT for federal income tax purposes.
 
 Our
Business Segments
 
 We define
business segments by their distinct customer base and service provided.
Management has identified three reportable segments: student housing leasing,
management services and development consulting services. We evaluate each
segment’s performance based on pre-tax income and on net operating income, which
is defined as income before depreciation, amortization, impairment losses,
interest expense (income), gains (losses) on extinguishment of debt, equity in
earnings of unconsolidated entities, noncontrolling interests and discontinued
operations. The accounting policies of the reportable segments are described in
more detail in the summary of significant accounting policies in the footnotes
to the accompanying condensed consolidated financial statements.
Inter-company fees are reflected at the contractually stipulated
amounts.
  25
 
 Student
housing leasing
 
 Student
housing leasing revenue represented approximately 91.9% of our revenue,
excluding operating expense reimbursements, for the six months ended June 30,
2010.
 
 Unlike
multi-family housing where apartments are leased by the unit, student-housing
communities are typically leased by the bed on an individual lease liability
basis. Individual lease liability limits each resident’s liability to his or her
own rent without liability for a roommate’s rent. The number of lease contracts
that we administer is therefore equivalent to the number of beds occupied
instead of the number of apartment units occupied.  A parent or guardian is
required to execute each lease as a guarantor unless the resident provides
adequate proof of income and/or pays a deposit, which is usually equal to two
months rent.
 
 Due to
our predominantly private bedroom accommodations, the high level of
student-oriented amenities, the fact that units are furnished and in most cases
rent includes utilities, cable television and internet service and because of
the individual lease liability, we believe our communities can typically command
higher per-unit and per-square foot rental rates than most multi-family
communities in the same geographic markets. We are also typically able to
command higher rental rates than on-campus student housing, which tends to offer
fewer amenities.
 
 The
majority of our leases commence mid-August and terminate the last day of July.
These dates generally coincide with the commencement of the universities’ fall
academic term and the completion of the subsequent summer school session. As
such, we are required to re-lease each community in its entirety each year,
resulting in significant turnover in our tenant population from year to year. In
2009 and 2008, approximately 70.0% and 69.3%, respectively, of our leased beds
were to students who were first-time residents at our communities. As a result,
we are highly dependent upon the effectiveness of our marketing and leasing
efforts during the annual leasing season that typically begins in November and
ends in August of each year. Our communities’ occupancy rates are therefore
typically stable during the August to July academic year but are susceptible to
fluctuation at the commencement of each new academic year.
 
 Prior to
the commencement of each new lease period, mostly during the first two weeks of
August but also during September at some communities, we prepare the units for
new incoming tenants. Other than revenue generated by in-place leases for
returning tenants, we do not generally recognize lease revenue during this
period referred to as “Turn” as we have no leases in place. In addition, we
incur significant expenses during Turn to make our units ready for occupancy.
These expenses are recognized when incurred. This Turn period results in
seasonality in our operating results during the third quarter of each
year.
 
 Management
services
 
 For the
six months ended June 30, 2010, revenue from our management services segment
represented approximately 6.0% of our revenue, excluding operating expense
reimbursements.  We provide management services for collegiate student
housing communities owned by educational institutions, charitable foundations,
the Trust and others. Our management services typically cover all aspects of
community operations, including residence life and student development,
marketing, leasing administration, strategic relationships, information systems
and accounting services. We provide these services pursuant to multi-year
management agreements under which management fees are typically 3-5% of leasing
revenue.  These agreements usually have an initial term of two to five
years with renewal options of like terms. As part of the management agreements,
there are certain payroll and related expenses we pay on behalf of the property
owners. These costs are included in reimbursable operating expenses and are
required to be reimbursed to us by the property owners. We recognize the expense
and revenue related to these reimbursements when incurred. These operating
expenses are wholly reimbursable and therefore not considered by management when
analyzing the operating performance of our management services
business.
 
 Development
consulting services
 
 For the
six months ended June 30, 2010, revenue from our development consulting
services represented approximately 2.1% of our revenue, excluding operating
expense reimbursements. We provide development consulting services primarily to
colleges and universities seeking to modernize their on-campus student housing
communities but also to the Trust and other third-party
investors.
  26
  Our
development consulting services typically include the following:
 
 •
              market analysis and evaluation of
      student housing needs and
options;
 
 •
              cooperation with college or
      university in architectural
design;
 
 •
              negotiation of ground lease,
      development agreement, construction contract, architectural contract and
      bond documents;
 
 •
              oversight of architectural design
      process;
 
 •
              coordination of governmental and
      university plan approvals;
 
 •
              oversight of construction
      process;
 
 •
              design, purchase and installation
      of furniture;
 
 •
              pre-opening marketing to
      students; and
 
 •
              obtaining final approvals of
      construction.
 
 Fees for
these services are typically 3-5% of the total cost of a project and are payable
over the life of the construction period, which in most cases is one to two
years in length. Occasionally, the development consulting contracts include a
provision whereby the Trust can participate in project savings resulting from
successful cost management efforts.  These revenues are recognized once all
contractual terms have been satisfied and no future performance requirements
exist.  This typically occurs after construction is complete.
 
 In 2007,
we began developing projects for our ownership and we plan to increase
self-development activity going forward. We opened the first of these
self-developed projects in 2008 in Carbondale, Illinois (Reserve at Saluki
Point).  In August of 2009, we opened a second phase at Carbondale and also
completed the development of a wholly-owned self-developed community in
Syracuse, New York. In July 2010, the University of Texas Board of Regents
selected the Trust to be the ground tenant to develop, own and manage a new
high-rise apartment community near the campus of the University of Texas at
Austin.  This will be the second project under the Trust’s ONE Plan and its
third wholly owned development.
 
 Trends
and Outlook
 
 Rents
and occupancy
 
 We manage
our communities to maximize revenues, which are primarily driven by two
components: rental rates and occupancy rates. We customarily adjust rental rates
in order to maximize revenues, which in some cases results in a lower occupancy
rate, but in most cases results in stable or increasing revenue from the
community. As a result, a decrease in occupancy may be offset by an increase in
rental rates and may not be material to our operations. Periodically, certain of
our markets experience increases in new on-campus student housing being provided
by colleges and universities and off-campus student housing being provided by
developers. This additional student housing both on and off campus can create
competitive pressure on rental rates and occupancy.
 
 For the
six months ended June 30, 2010, same-community revenue per available bed
decreased to $377 and same-community physical occupancy increased to 88.5%
compared to revenue per available bed of $383 and physical occupancy of 87.4%
for the six months ended June 30, 2009. The results represent averages for the
Trust’s portfolio which are not necessarily indicative of every community in the
portfolio. As would be expected, individual communities can and do perform
both above and below these averages, and, at times, an individual community may
experience a decline in total revenue due to local university and economic
conditions. Our management focus is to assess these situations and address
them as quickly as possible in an effort to minimize the Trust’s exposure and
reverse any negative trend.
  27
 
 The
average physical and economic occupancies on a Legacy-community basis (which are
the same-communities, excluding the Place-communities)  for the second
quarter of 2010 were 88.2% and 86.6%, respectively, compared to 87.7% and 86.3%,
respectively, for the same quarter in 2009.  The Place-communities had
average physical and economic occupancies of 81.9% and 78.8%, respectively, for
the second quarter of 2010 compared to 79.0% and 76.7% in the second quarter of
2009. The occupancies achieved for the 2009-2010 lease term were at rental rates
approximately 2.0% below the prior lease term due to more rental discounting and
a higher level of concessions than in the past.
 
 As of
July 19th,
leasing for the 2010-2011 lease term on a same-community basis reflects
approximately 82.9% of beds preleased compared to 79.8% at this time last year,
with net rental rates up approximately 1.9% over the prior year.  The
Legacy-communities and the Place-communities have approximately 83.4% and 80.7%,
respectively, of the beds preleased compared to 82.9% and 73.7%, respectively,
at this time last year.
 
 Development
consulting services
 
 Third-party
development consulting services revenue experienced considerable growth from
2007 to 2009.  However, third-party development revenue declined 50.6% to
$1,341 for the six months ended June 30, 2010 as credit market conditions in
2009 delayed the financing and commencement of construction on previously
awarded projects.  Our development team is seeing an increase in interest
from colleges and universities that are considering new housing and continues to
receive requests for proposals on new development projects.  This is
evidenced by third-party development awards made in March 2010 for a 634 bed
on-campus community at Mansfield University of Pennsylvania and July 2010 for a
572 bed graduate student housing complex at the Science + Technology Park at
Johns Hopkins Medical Institute.  These new development awards increased
our third-party development fee backlog to $7,581 at June 30, 2010. However, due
to the delays experienced though June 30, 2010 and until the credit markets
return to more historical norms, we expect a lower level of third-party
development revenue throughout 2010.
 
 The Johns
Hopkins project is scheduled to open in the summer of 2012.  The Trust will
develop and manage the building which will be constructed on land owned by Johns
Hopkins University and leased to a subsidiary of East Baltimore Development,
Inc., a nonprofit partnership of private and public entities dedicated to
Baltimore’s urban revitalization. Under terms of the agreements, Education
Realty Trust will (a) receive development and construction oversight fees and
reimbursement of pre-development expenses, (b) invest in the form of an $18,000
second mortgage, (c) provide a repayment guarantee of the construction first
mortgage, and (d) receive a 10-year management contract.  The Trust will
recognize the development services revenue and interest income earned on the
second mortgage when the second mortgage is repaid.
 
 The
amount and timing of future revenues from development consulting services will
be contingent upon our ability to successfully compete in public colleges and
universities’ competitive procurement processes, our ability to successfully
structure financing of these projects and our ability to ensure completion of
construction within agreed construction timelines and budgets. To date, we have
completed construction on all of our development projects in time for their
targeted occupancy dates.
 
 Student
housing operating costs
 
 Cost
reduction initiatives put in place in the fourth quarter of 2008 helped drive a
reduction in same community operating expenses for the year ended December 31,
2009. For the six months ended June 30, 2010, same community operating expenses
remained relatively flat when compared to the same period in 2009 due to the
reduction of expenses achieved in the prior year that were maintained during the
first and second quarters of 2010. Although we do not expect significant
reductions in same community operating expenses going forward, we will continue
to maintain our focus to operate our properties as efficiently as
possible.
 
 General
and administrative costs
 
 For the
year-ended December 31, 2009, general and administrative costs, before
development pursuit costs, remained relatively flat when compared to 2008.
Starting in 2010, we began a reorganization program and as a result have seen a
reduction in general and administrative expenses, before severance and
development pursuit costs, when compared to the same period in 2009. We expect
this trend to continue through out 2010 and will continue to focus on operating
efficiencies where appropriate.
  28
 
 Critical
Accounting Policies
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States (“GAAP”) requires management to make
estimates and assumptions in certain circumstances that affect amounts reported
in our financial statements and related notes. In preparing these financial
statements, management has utilized all available information, including its
past history, industry standards and the current economic environment, among
other factors, in forming its estimates and judgments of certain amounts
included in the financial statements, giving due consideration to materiality.
The ultimate outcome anticipated by management in formulating its estimates may
not be realized. Application of the critical accounting policies below involves
the exercise of judgment and use of assumptions as to future uncertainties and,
as a result, actual results could differ from these estimates. In addition,
other companies in similar businesses may utilize different estimation policies
and methodologies, which may impact the comparability of our results of
operations and financial condition to those companies.
 
 Student
housing leasing revenue recognition
 
 Student
housing leasing revenue is comprised of all revenue related to the leasing
activities at our student housing communities and includes revenues from leasing
apartments by the bed, food services, parking space rentals and certain
ancillary services.
 
 Students
are required to execute lease contracts with payment schedules that vary from
per semester to monthly. Generally, a parental guarantee must accompany each
executed contract. Receivables are recorded when due, while leasing revenue and
related lease incentives/concessions and nonrefundable application and service
fees are recognized on a straight-line basis over the term of the contracts.
Balances are considered past due when payment is not received on the contractual
due date. Allowances for doubtful accounts are established by management when it
is determined that collection is doubtful.
 
 Revenue
and cost recognition of development consulting services
 
 Costs
associated with the pursuit of third-party development consulting contracts are
expensed as incurred until such time as we have been notified of a contract
award or reimbursement has been otherwise guaranteed by the customer. At such
time, the reimbursable portion of such costs is recorded as a receivable.
Development consulting revenues are recognized using the percentage of
completion method as determined by construction costs incurred relative to the
total estimated construction costs. Occasionally, our development consulting
contracts include a provision whereby we can participate in project savings
resulting from our successful cost management efforts. We recognize these
revenues once all contractual terms have been satisfied and we have no future
performance requirements. This typically occurs after construction is complete.
Costs associated with development consulting services are expensed as incurred.
We generally receive a significant percentage of our fees for development
consulting services upon closing of the project financing, a portion of the fee
over the construction period and the balance upon substantial completion of
construction. Because revenue from these services is recognized for financial
reporting purposes utilizing the percentage of completion method, differences
occur between amounts received and revenues recognized. Differences also occur
between amounts recognized for tax purposes and those recognized for financial
reporting purposes. Because REITs are required to distribute 90% of their
taxable income, our distribution requirement with respect to our income from
third-party services may exceed that reflected as net income for financial
reporting purposes from such activities.
 
 We also
periodically enter into joint venture arrangements whereby we provide
development consulting services to third-party student housing owners in an
agency capacity. We recognize our portion of the earnings in each joint venture
based on our ownership interest, which is reflected after net operating income
in our condensed consolidated statement of operations as equity in earnings of
unconsolidated entities. Our revenue and operating expenses could fluctuate from
period to period based on the extent to which we utilize joint venture
arrangements to provide third-party development consulting
services.
  29
 
 Student
housing property acquisitions and dispositions
 
 Land,
land improvements, buildings and improvements and furniture, fixtures and
equipment are recorded at cost. Buildings and improvements are depreciated over
15 to 40 years, land improvements are depreciated over 15 years and
furniture, fixtures, and equipment are depreciated over 3 to 7 years.
Depreciation is computed using the straight-line method for financial reporting
purposes.
  Acquired
student housing communities’ results of operations are included in the Trust’s
results of operations from the respective dates of acquisition. 
Appraisals, estimates of cash flows and valuation techniques are used to
allocate the purchase price of acquired property between land, land
improvements, buildings and improvements, furniture, fixtures and equipment and
identifiable intangibles such as amounts related to in-place leases. On January
1, 2009, the Trust adopted the authoritative guidance issued by the FASB, which
prospectively changed the requirements for how an acquirer recognizes and
measures the identifiable assets acquired, the liabilities assumed, any
noncontrolling interests in the acquiree and the goodwill acquired.  The
guidance also enhanced the disclosures to enable the evaluation of the nature
and financial effects of the business combination and requires that
pre-acquisition costs be expensed as incurred. Pre-acquisition costs, which
include legal and professional fees and other third-party costs related directly
to the acquisition of a community, were accounted for as part of the purchase
price prior to the adoption of the guidance issued by the FASB.
 
 When a
student housing community has met the criteria to be classified as held for
sale, the fair value less cost to sell such asset is estimated. If fair value
less cost to sell the asset is less than the carrying amount of the asset, an
impairment charge is recorded for the estimated loss. Depreciation expense is no
longer recorded once a student housing community has met the held for sale
criteria. The related carrying value of the community is recorded as held for
sale in the consolidated balance sheet and operations of student housing
communities that are sold or classified as held for sale are recorded as part of
discontinued operations for all periods presented.
 
 Repairs
and maintenance
 
 The costs
of ordinary repairs and maintenance are charged to operations when incurred.
Major improvements that extend the life of an asset beyond one year are
capitalized and depreciated over the remaining useful life of the asset. Planned
major repair, maintenance and improvement projects are capitalized when
performed. In some circumstances, the lenders require us to maintain a reserve
account for future repairs and capital expenditures. These amounts are not
available for current use and are recorded as restricted cash on our condensed
consolidated balance sheet.
 
 Long
lived assets — impairment
 
 Management
is required to assess whether there are any indicators that our real estate
assets may be impaired.  A community’s value is considered impaired if
management’s estimate of the aggregate future cash flows (undiscounted and
without interest charges) to be generated by the community, based on its
intended use, is less than the carrying value of the community. These estimates
of cash flows are based on factors such as future intended use of the asset,
expected future operating income, trends and prospects, as well as the effects
of demand, competition and other factors. To the extent impairment has occurred,
the loss will be measured as the excess of the carrying amount of the community
over the fair value of the community, thereby reducing our net income.
 
 Use
of estimates
 
 Significant
estimates and assumptions are used by management in determining the recognition
of third-party development consulting revenue under the percentage of completion
method, useful lives of student housing assets, the valuation of goodwill, the
initial valuations and underlying allocations of purchase price in connection
with student housing property acquisitions, the determination of fair value for
impairment assessments, and in recording the allowance for doubtful
accounts.  Actual results could differ from those
estimates.
  30


We review
our assets, including our student housing communities, communities under
development, and goodwill for potential impairment indicators whenever events or
circumstances indicate that the carrying value might not be
recoverable.  Impairment indicators include, but are not limited to,
declines in our market capitalization, overall market factors, changes in cash
flows, significant decreases in net operating income and occupancies at our
operating properties, changes in projected completion dates of our development
projects, and sustainability of development projects.  Our tests for
impairment are based on the most current information available and if conditions
change or if our plans regarding our assets change, it could result in
additional impairment charges in the future.  However, based on our
plans with respect to our operating properties and those under development, we
believe the carrying amounts are recoverable.





Recently
Adopted Accounting Pronouncements





On
January 1, 2009, the Trust adopted the authoritative guidance issued by the FASB
on business combinations. The guidance establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling
interest in the acquiree and the goodwill acquired. The guidance also
establishes disclosure requirements to enable the evaluation of the nature and
financial effects of the business combination and requires that pre-acquisition
costs be expensed as incurred. The adoption did not have a material impact on
the consolidated financial statements.





On
January 1, 2009, the Trust adopted the authoritative guidance issued by the FASB
that changes the accounting and reporting for noncontrolling interests. The
guidance establishes accounting and reporting standards for ownership interests
in subsidiaries held by parties otherthan the parent, the
amount of consolidated net income attributable to the parent and to the
noncontrolling interest, changes in a parent’s ownership interest andthe valuation of
retained noncontrolling equity investments when a subsidiary is deconsolidated.
The guidance also establishes disclosure requirements that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. As a result of the adoption, the Trust has reported
nonredeemable noncontrolling interests as a component of equity in the
consolidated balance sheets.  The prior periods presented have also
been reclassified to conform to the current classification.





In
May 2009, the FASB issued new authoritative guidance on subsequent
events.  The new guidance is intended to establish general standards
of accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued.
Specifically, this standard sets forth the period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.  This guidance is
effective for financial statements issued for fiscal years and interim periods
beginning after June 15, 2009 and is applied prospectively.  The
Trust adopted this authoritative guidance during the three months ended
September 30, 2009.  In February 2010, the FASB amended the authoritative
guidance on subsequent events to remove the requirement for SEC filers to
disclose the date through which an entity has evaluated subsequent events. The
new guidance is effective upon issuance and had no impact on the Trust’s
consolidated financial statements.





In
June 2009, the FASB issued guidance to establish only two levels of GAAP,
authoritative and nonauthoritative. The FASB Accounting Standards Codification
(the “Codification”) is the source of authoritative, nongovernmental GAAP,
except for rules and interpretive releases of the SEC, which are sources of
authoritative GAAP for SEC registrants. All other nongrandfathered, non-SEC
accounting literature not included in the Codification is nonauthoritative. This
standard is effective for financial statements issued for fiscal years and
interim periods ending after September 15, 2009.   As the
Codification was not intended to change or alter existing GAAP, it did not have
any impact on the consolidated financial statements.





In
June 2009, the FASB issued authoritative guidance to improve financial
reporting by enterprises involved with variable interest entities. The new
guidance is effective for financial statements issued for fiscal years beginning
after November 15, 2009, with early adoption prohibited. The adoption did
not have a material impact on the consolidated financial
statements.





In
January 2010, the FASB updated the authoritative guidance for accounting and
reporting for decreases in ownership of a subsidiary. The updated guidance
clarifies the scope of the guidance related to a decrease in ownership
provisions and expands the disclosures related to the deconsolidation of a
subsidiary or group of assets. The updated guidance is effective for financial
statements issued for fiscal years and interim periods beginning after December
15, 2009.  The adoption did not have a material impact on the
consolidated financial statements.


31




Results
of Operations for the Six Months Ended June 30, 2010 and 2009





The
following table presents the results of operations for Education Realty Trust,
Inc. for the six months ended June 30, 2010 and 2009:




Six
      Months Ended June 30, 2010
                                                      
                                                      
                                                      Six
      Months Ended June 30, 2009Student
                                                      
                                                      
                                                      Development
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Student
                                                      
                                                      
                                                      DevelopmentHousing
                                                      
                                                      
                                                      Consulting
                                                      
                                                      
                                                      Management
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      Housing
                                                      
                                                      
                                                      Consulting
                                                      
                                                      
                                                      ManagementLeasing
                                                      
                                                      
                                                      Services
                                                      
                                                      
                                                      Services
                                                      
                                                      
                                                      Eliminations
                                                      
                                                      
                                                      Total
                                                      
                                                      
                                                      Leasing
                                                      
                                                      
                                                      Services
                                                      
                                                      
                                                      Services
                                                      
                                                      
                                                      Eliminations
                                                      
                                                      
                                                      TotalSegment
      revenues:Student
      housing leasing revenue
                                                      
                                                      $
                                                      58,045
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      58,045
                                                      
                                                      
                                                      $
                                                      57,280
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      57,280Third-party
      development consulting services
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,341
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,341
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      2,716
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      2,716Third-party
      management services
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,573
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,573
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,632
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,632Intersegment
      revenues
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      2,196
                                                      
                                                      
                                                      
                                                      (2,196
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,048
                                                      
                                                      
                                                      
                                                      2,186
                                                      
                                                      
                                                      
                                                      (3,234
                                                      )
                                                      
                                                      
                                                      —Operating
      expense reimbursements
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      3,865
                                                      
                                                      
                                                      
                                                      3,865
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      4,226
                                                      
                                                      
                                                      
                                                      4,226Total
      segment  revenues
                                                      
                                                      
                                                      58,045
                                                      
                                                      
                                                      
                                                      1,341
                                                      
                                                      
                                                      
                                                      3,769
                                                      
                                                      
                                                      
                                                      1,669
                                                      
                                                      
                                                      
                                                      64,824
                                                      
                                                      
                                                      
                                                      57,280
                                                      
                                                      
                                                      
                                                      3,764
                                                      
                                                      
                                                      
                                                      3,818
                                                      
                                                      
                                                      
                                                      992
                                                      
                                                      
                                                      
                                                      65,854Segment
      operating expenses:Student
      housing leasing operations
                                                      
                                                      
                                                      26,646
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      26,646
                                                      
                                                      
                                                      
                                                      26,099
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      26,099General
      and administrative
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,620
                                                      
                                                      
                                                      
                                                      3,917
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      5,537
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      1,481
                                                      
                                                      
                                                      
                                                      3,679
                                                      
                                                      
                                                      
                                                      (81
                                                      )
                                                      
                                                      
                                                      5,079Intersegment
      expenses
                                                      
                                                      
                                                      2,196
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      (2,196
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      2,186
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      (2,186
                                                      )
                                                      
                                                      
                                                      —Reimbursable
      operating expenses
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      3,865
                                                      
                                                      
                                                      
                                                      3,865
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      4,226
                                                      
                                                      
                                                      
                                                      4,226Total
      segment operating expenses
                                                      
                                                      
                                                      28,842
                                                      
                                                      
                                                      
                                                      1,620
                                                      
                                                      
                                                      
                                                      3,917
                                                      
                                                      
                                                      
                                                      1,669
                                                      
                                                      
                                                      
                                                      36,048
                                                      
                                                      
                                                      
                                                      28,285
                                                      
                                                      
                                                      
                                                      1,481
                                                      
                                                      
                                                      
                                                      3,679
                                                      
                                                      
                                                      
                                                      1,959
                                                      
                                                      
                                                      
                                                      35,404Net
      operating income (loss)
                                                      
                                                      
                                                      29,203
                                                      
                                                      
                                                      
                                                      (279
                                                      )
                                                      
                                                      
                                                      (148
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      28,776
                                                      
                                                      
                                                      
                                                      28,995
                                                      
                                                      
                                                      
                                                      2,283
                                                      
                                                      
                                                      
                                                      139
                                                      
                                                      
                                                      
                                                      (967
                                                      )
                                                      
                                                      
                                                      30,450Nonoperating
      expenses(1)
                                                      
                                                      
                                                      25,955
                                                      
                                                      
                                                      
                                                      (48
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      25,907
                                                      
                                                      
                                                      
                                                      25,796
                                                      
                                                      
                                                      
                                                      (42
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      25,754Income
      before equity in earnings (losses) of unconsolidated entities, income
      taxes and discontinued operations
                                                      
                                                      
                                                      3,248
                                                      
                                                      
                                                      
                                                      (231
                                                      )
                                                      
                                                      
                                                      (148
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      2,869
                                                      
                                                      
                                                      
                                                      3,199
                                                      
                                                      
                                                      
                                                      2,325
                                                      
                                                      
                                                      
                                                      139
                                                      
                                                      
                                                      
                                                      (967
                                                      )
                                                      
                                                      
                                                      4,696Equity
      in earnings (losses) of unconsolidated entities
                                                      
                                                      
                                                      86
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      86
                                                      
                                                      
                                                      
                                                      148
                                                      
                                                      
                                                      
                                                      (2
                                                      )
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      —
                                                      
                                                      
                                                      
                                                      146Income
      before income taxes and discontinued operations(2)
                                                      
                                                      $
                                                      3,334
                                                      
                                                      
                                                      $
                                                      (231
                                                      )
                                                      
                                                      $
                                                      (148
                                                      )
                                                      
                                                      $
                                                      —
                                                      
                                                      
                                                      $
                                                      2,955
                                                      
                                                      
                                                      $
                                                      3,347
                                                      
                                                      
                                                      $
                                                      2,323
                                                      
                                                      
                                                      $
                                                      139
                                                      
                                                      
                                                      $
                                                      (967
                                                      )
                                                      
                                                      $
                                                      4,842




32





(1)
            Nonoperating
      expenses include interest expense, interest income, gains (losses) on the
      extinguishment of debt, amortization of deferred financing costs,
      depreciation, amortization of intangibles and impairment losses on assets.
      Certain expenses, which are classified as operating expenses in the
      condensed consolidated financial statements, are classified as
      nonoperating expenses for presentation purposes above based on how
      management evaluates segment operating
  performance.





(2)
            The
      following is a reconciliation of the reportable segments’ income before
      income taxes and discontinued operations to the Trust’s consolidated
      income (loss) before income taxes and discontinued operations for the six
      months ended June 30:





2010
                          
                          
                          2009Income before
      income taxes and discontinued operations for reportable
      segments
                          
                          $
                          2,955
                          
                          
                          $
                          4,842Other
      unallocated corporate expenses
                          
                          
                          (3,352
                          )
                          
                          
                          (3,313
                          )Income
      (loss) before income taxes and discontinued operations
                          
                          $
                          (397
                          )
                          
                          $
                          1,529





Student
housing leasing





Student
housing operating statistics for the six months ended June 30, 2010 and 2009
were as follows:





Six
      months
                  
                  
                  Six
      monthsended
                  
                  
                  endedJune
      30,
                  
                  
                  June
      30,
                  
                  
                  Favorable2010
                  
                  
                  2009(8)
                  
                  
                  (Unfavorable)Wholly-owned
      communities:OccupancyPhysical
      (1)
                  
                  
                  87.8
                  %
                  
                  
                  87.6
                  %
                  
                  
                  20
                  bpsEconomic
      (2)
                  
                  
                  86.0
                  %
                  
                  
                  87.1
                  %
                  
                  
                  (110
                  )bpsNARPAB
      (3)
                  
                  $
                  360
                  
                  
                  $
                  362
                  
                  
                  $
                  (2
                  )Other
      income per avail. bed (4)
                  
                  $
                  20
                  
                  
                  $
                  23
                  
                  
                  $
                  (3
                  )RevPAB
      (5)
                  
                  $
                  380
                  
                  
                  $
                  385
                  
                  
                  $
                  (5
                  )Operating
      expense per bed (6)
                  
                  $
                  174
                  
                  
                  $
                  176
                  
                  
                  $
                  2Operating
      margin (9)
                  
                  
                  54.1
                  %
                  
                  
                  54.4
                  %
                  
                  
                  (30
                  )bpsDesign
      beds (7)
                  
                  
                  152,724
                  
                  
                  
                  148,710
                  
                  
                  
                  4,014Same
      communities:OccupancyPhysical
      (1)
                  
                  
                  88.5
                  %
                  
                  
                  87.4
                  %
                  
                  
                  110
                  bpsEconomic
      (2)
                  
                  
                  87.2
                  %
                  
                  
                  86.8
                  %
                  
                  
                  40
                  bpsNARPAB
      (3)
                  
                  $
                  356
                  
                  
                  $
                  360
                  
                  
                  $
                  (4
                  )Other
      income per avail. bed (4)
                  
                  $
                  21
                  
                  
                  $
                  23
                  
                  
                  $
                  (2
                  )RevPAB
      (5)
                  
                  $
                  377
                  
                  
                  $
                  383
                  
                  
                  $
                  (6
                  )Operating
      expense per bed (6)
                  
                  $
                  175
                  
                  
                  $
                  174
                  
                  
                  $
                  (1
                  )Operating
      margin (9)
                  
                  
                  53.6
                  %
                  
                  
                  54.5
                  %
                  
                  
                  (90
                  )bpsDesign
      beds (7)
                  
                  
                  145,524
                  
                  
                  
                  145,542
                  
                  
                  
                  —




(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.





(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/application fees, late fees, termination
      fees, parking fees, transfer fees, damage recovery, utility recovery, and
      other miscellaneous fees.





(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 management fees, 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.





(8)
            This
      information excludes property information related to College Station
      (discontinued operations).





(9)
            Represents
      operating income divided by
revenue.




33





Total
revenue in the student housing leasing segment was $58,045 for the six
months ended June 30, 2010. This represents an increase of $765, or 1.3%, from
the same period in 2009.  This increase included $1,668 related to the
new communities, University Village on Colvin (Syracuse) and The Reserve at
Saluki Pointe (Carbondale), that opened in the third quarter of
2009.  Revenue at the Place-communities increased 4.2%, or $440, on a
4.2% improvement in occupancies, a decline in rental rates of approximately 0.4%
and a 0.3% increase in other rental revenue.  These increases were
offset by a 3.0%, or $1,342, decline in Legacy-community revenue, which was the
result of a 2.5% decline in rental rates, a 0.7% decline in other rental revenue
and a 0.2% improvement in occupancies.





Operating
expenses in the student housing leasing segment increased $557, or 2.0%, to
$28,842 for the six months ended June 30, 2010 as compared to the same period in
2009.  The new communities that opened in the third quarter of 2009
contributed $475 of the increase from the prior year.  The
Place-community operating expenses increased $149, or 2.7% due to higher
utilities and maintenance costs. These increases were offset by a decline in
Legacy-community operating expenses of $76, or 0.4% which was primarily
attributable to a decline in real estate taxes, insurance and bad debt expense
offset by higher utilities.





Development
consulting services





The
following table represents the development consulting projects that were active
during the six months ended June 30, 2010 and 2009:





Recognized EarningsProject
                                                                                                                                                                              
                                                                                                                                                                              Beds
                                                                                                                                                                              
                                                                                                                                                                              Fee Type
                                                                                                                                                                              
                                                                                                                                                                              2010
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              2009
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              DifferenceUniversity
      of Michigan
                                                                                                                                                                              
                                                                                                                                                                              896
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              $
                                                                                                                                                                              1
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              $
                                                                                                                                                                              155
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              $
                                                                                                                                                                              (154
                                                                                                                                                                              )Fontainebleu
      Renovation Project
                                                                                                                                                                              
                                                                                                                                                                              435
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              50
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (50
                                                                                                                                                                              )West
      Chester— Phase I
                                                                                                                                                                              
                                                                                                                                                                              1,197
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              987
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (987
                                                                                                                                                                              )Indiana
      University of Pennsylvania — Phase III
                                                                                                                                                                              
                                                                                                                                                                              1,084
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              739
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (739
                                                                                                                                                                              )Indiana
      University of Pennsylvania — Phase IV
                                                                                                                                                                              
                                                                                                                                                                              596
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              535
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              53
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              482Colorado
      State University — Pueblo I
                                                                                                                                                                              
                                                                                                                                                                              253
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              354
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (354
                                                                                                                                                                              )Colorado
      State University — Pueblo II
                                                                                                                                                                              
                                                                                                                                                                              500
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              513
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              196
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              317Auraria
      Higher Education System
                                                                                                                                                                              
                                                                                                                                                                              685
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              182
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (182
                                                                                                                                                                              )SUNY
      College of Environmental Science and Forestry
                                                                                                                                                                              
                                                                                                                                                                              454
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              67
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              67Miscellaneous
      consulting fees
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              Consulting
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              225
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              225Third-party
      development consulting services
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              1,341
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              2,716
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (1,375
                                                                                                                                                                              )Southern
      Illinois University— Carbondale
                                                                                                                                                                              
                                                                                                                                                                              768
                                                                                                                                                                              
                                                                                                                                                                              Construction
      oversight fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              86
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (86
                                                                                                                                                                              )Syracuse
      University
                                                                                                                                                                              
                                                                                                                                                                              432
                                                                                                                                                                              
                                                                                                                                                                              Development
      fee
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              962
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (962
                                                                                                                                                                              )Intersegment
      development services
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              —
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              1,048
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              (1,048
                                                                                                                                                                              )Development
      consulting services
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              $
                                                                                                                                                                              1,341
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              $
                                                                                                                                                                              3,764
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                                                                                                              $
                                                                                                                                                                              (2,423
                                                                                                                                                                              )





Development
consulting services revenue decreased $2,423, or 64.4%, to $1,341 for the six
months ended June 30, 2010 as compared to the same period in
2009.  Third-party development consulting revenue declined $1,375 from
the prior year as credit market conditions in 2009 delayed the financing and the
commencement of construction on previously awarded projects, resulting in only
three active third-party development jobs so far this year.  However,
the decrease in active third-party development consulting revenue was offset by
$225 in revenue related to consulting services that were unrelated to an active
development project.  The intersegment revenue decline relates to two
internal developments that were completed in the third quarter of
2009.  As these fees relate to development services performed on
projects owned by the Trust, they are eliminated in the accompanying condensed
consolidated financial statements.


34





General
and administrative expenses increased $139, or 9.4%, for the six months ended
June 30, 2010. This increase is primarily due to an increase in third-party
development pursuit costs of $289 offset by a decrease in payroll and
benefits.





Management
services





Total
management services revenue decreased by $49, or 1.3%, to $3,769 for the six
months ended June 30, 2010 compared to the same period in 2009.  This
decline was mainly driven by lower third-party management fee revenue as a
result of the 2009 cancellation of a contract for one community in
Alabama.  Revenue for existing contracts and intersegment revenue
related to our owned portfolio remained essentially flat when compared to the
same period in 2009.





General
and administrative costs increased $238 as compared to the same period in 2009
due to $519 of severance costs incurred in 2010.  Excluding the
severance costs, general and administrative costs in the management services
segment have been reduced by 8% from the prior year.





Unallocated
corporate expenses





Unallocated
corporate expenses represent general and administrative expenses that are not
allocated to any of our business segments.  For the six months ended
June 30, 2010, unallocated corporate expenses remained relatively flat when
compared to the prior year at approximately $3,352.





Nonoperating
expenses





Nonoperating
expenses increased $153, or 0.6%, for the six months ended June 30, 2010,
compared to the same period in 2009. This increase includes an $830 gain on
extinguishment of debt in the prior year related to the reduction in mortgage
debt on certain Place-communities and $716 in additional depreciation and
amortization related to the new communities that opened in the third quarter of
2009.  These increases were offset by a $1,433 decline in interest
expense as a result of the July 2009 repayment of the Amended Revolver and a
reduction in mortgage debt.





Equity
in earnings of unconsolidated entities





Equity in
earnings of unconsolidated entities represents our share of the net income or
loss related to four investments in unconsolidated entities that own student
housing communities. For the six months ended June 30, 2010, equity in earnings
was $86 compared to $146 in the prior year. The main drivers of the
decrease were a decline in occupancy and an increase in interest expense at our
joint venture property in Greensboro, North Carolina and a decline in occupancy
at our joint venture property in Isla Vista, California.




35




Results
of Operations for the Three Months Ended June 30, 2010 and 2009





The
following table presents the results of operations for Education Realty Trust,
Inc. for the three months ended June 30, 2010 and 2009:




Three
      Months Ended June 30, 2010
                                                
                                                
                                                Three
      Months Ended June 30, 2009Student
                                                
                                                
                                                Development
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                Student
                                                
                                                
                                                DevelopmentHousing
                                                
                                                
                                                Consulting
                                                
                                                
                                                Management
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                Housing
                                                
                                                
                                                Consulting
                                                
                                                
                                                ManagementLeasing
                                                
                                                
                                                Services
                                                
                                                
                                                Services
                                                
                                                
                                                Eliminations
                                                
                                                
                                                Total
                                                
                                                
                                                Leasing
                                                
                                                
                                                Services
                                                
                                                
                                                Services
                                                
                                                
                                                Eliminations
                                                
                                                
                                                TotalSegment
      revenues:Student
      housing leasing revenue
                                                
                                                $
                                                28,394
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                28,394
                                                
                                                
                                                $
                                                27,967
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                27,967Third-party
      development consulting services
                                                
                                                
                                                —
                                                
                                                
                                                
                                                648
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                648
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,259
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,259Third-party
      management services
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                707
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                707
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                723
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                723Intersegment
      revenues
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,065
                                                
                                                
                                                
                                                (1,065
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                574
                                                
                                                
                                                
                                                1,061
                                                
                                                
                                                
                                                (1,635
                                                )
                                                
                                                
                                                —Operating
      expense reimbursements
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,957
                                                
                                                
                                                
                                                1,957
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                2,036
                                                
                                                
                                                
                                                2,036Total
      segment revenues
                                                
                                                
                                                28,394
                                                
                                                
                                                
                                                648
                                                
                                                
                                                
                                                1,772
                                                
                                                
                                                
                                                892
                                                
                                                
                                                
                                                31,706
                                                
                                                
                                                
                                                27,967
                                                
                                                
                                                
                                                1,833
                                                
                                                
                                                
                                                1,784
                                                
                                                
                                                
                                                401
                                                
                                                
                                                
                                                31,985Segment
      operating expenses:Student
      housing leasing operations
                                                
                                                
                                                13,208
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                13,208
                                                
                                                
                                                
                                                12,929
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                12,929General
      and administrative
                                                
                                                
                                                —
                                                
                                                
                                                
                                                842
                                                
                                                
                                                
                                                1,811
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                2,653
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                749
                                                
                                                
                                                
                                                1,711
                                                
                                                
                                                
                                                (44
                                                )
                                                
                                                
                                                2,416Intersegment
      expenses
                                                
                                                
                                                1,065
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (1,065
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,061
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                (1,061
                                                )
                                                
                                                
                                                —Reimbursable
      operating expenses
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                1,957
                                                
                                                
                                                
                                                1,957
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                2,036
                                                
                                                
                                                
                                                2,036Total
      segment operating expenses
                                                
                                                
                                                14,273
                                                
                                                
                                                
                                                842
                                                
                                                
                                                
                                                1,811
                                                
                                                
                                                
                                                892
                                                
                                                
                                                
                                                17,818
                                                
                                                
                                                
                                                13,990
                                                
                                                
                                                
                                                749
                                                
                                                
                                                
                                                1,711
                                                
                                                
                                                
                                                931
                                                
                                                
                                                
                                                17,381Net
      operating income (loss)
                                                
                                                
                                                14,121
                                                
                                                
                                                
                                                (194
                                                )
                                                
                                                
                                                (39
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                13,888
                                                
                                                
                                                
                                                13,977
                                                
                                                
                                                
                                                1,084
                                                
                                                
                                                
                                                73
                                                
                                                
                                                
                                                (530
                                                )
                                                
                                                
                                                14,604Nonoperating
      expenses(1)
                                                
                                                
                                                12,963
                                                
                                                
                                                
                                                (25
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                12,938
                                                
                                                
                                                
                                                12,367
                                                
                                                
                                                
                                                (31
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                12,336Income
      (loss) before equity in earnings of unconsolidated entities, income
      taxes and discontinued operations
                                                
                                                
                                                1,158
                                                
                                                
                                                
                                                (169
                                                )
                                                
                                                
                                                (39
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                950
                                                
                                                
                                                
                                                1,610
                                                
                                                
                                                
                                                1,115
                                                
                                                
                                                
                                                73
                                                
                                                
                                                
                                                (530
                                                )
                                                
                                                
                                                2,268Equity
      in earnings of unconsolidated entities
                                                
                                                
                                                7
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                7
                                                
                                                
                                                
                                                48
                                                
                                                
                                                
                                                (2
                                                )
                                                
                                                
                                                —
                                                
                                                
                                                
                                                —
                                                
                                                
                                                
                                                46Income
      (loss) before income taxes and discontinued operations(2)
                                                
                                                $
                                                1,165
                                                
                                                
                                                $
                                                (169
                                                )
                                                
                                                $
                                                (39
                                                )
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                957
                                                
                                                
                                                $
                                                1,658
                                                
                                                
                                                $
                                                1,113
                                                
                                                
                                                $
                                                73
                                                
                                                
                                                $
                                                (530
                                                )
                                                
                                                $
                                                2,314





(1)
              Nonoperating
      expenses include interest expense, interest income, gains (losses) on the
      extinguishment of debt, amortization of deferred financing costs,
      depreciation, amortization of intangibles and impairment losses on assets.
      Certain expenses, which are classified as operating expenses in the
      condensed consolidated financial statements, are classified as
      nonoperating expenses for presentation purposes above based on how
      management evaluates segment operating
  performance.





(2)
              The
      following is a reconciliation of the reportable segments’ income before
      income taxes and discontinued operations to the Trust’s consolidated
      income (loss) before income taxes and discontinued operations for the
      three months ended June 30:





2010
                              
                              
                              2009Income
      before income taxes and discontinued operations for reportable
      segments
                              
                              $
                              957
                              
                              
                              
                              2,314Other
      unallocated corporate expenses
                              
                              
                              (1,661
                              )
                              
                              
                              (1,632
                              )Income
      (loss) before income taxes and discontinued operations
                              
                              $
                              (704
                              )
                              
                              
                              682




36


Student
housing leasing





Student
housing operating statistics for wholly-owned communities and same-communities
for the three months ended June 30, 2010 and 2009 were as follows:





Three
      months
                  
                  
                  Three
      monthsended
                  
                  
                  endedJune
      30,
                  
                  
                  June
      30,
                  
                  
                  Favorable2010
                  
                  
                  2009 (8)
                  
                  
                  (Unfavorable)Wholly-owned
      communities:OccupancyPhysical
      (1)
                  
                  
                  85.8
                  %
                  
                  
                  85.8
                  %
                  
                  
                  —Economic
      (2)
                  
                  
                  83.4
                  %
                  
                  
                  84.6
                  %
                  
                  
                  (120
                  )bpsNARPAB
      (3)
                  
                  $
                  350
                  
                  
                  $
                  352
                  
                  
                  $
                  (2
                  )Other
      income per avail. bed (4)
                  
                  $
                  22
                  
                  
                  $
                  24
                  
                  
                  $
                  (2
                  )RevPAB
      (5)
                  
                  $
                  372
                  
                  
                  $
                  376
                  
                  
                  $
                  (4
                  )Operating
      expense per bed (6)
                  
                  $
                  173
                  
                  
                  $
                  174
                  
                  
                  $
                  1Operating
      margin (9)
                  
                  
                  53.5
                  %
                  
                  
                  53.8
                  %
                  
                  
                  (30
                  )bpsDesign
      Beds (7)
                  
                  
                  76,362
                  
                  
                  
                  74,346
                  
                  
                  
                  2,016Same-communities:OccupancyPhysical
      (1)
                  
                  
                  86.7
                  %
                  
                  
                  85.6
                  %
                  
                  
                  110
                  bpsEconomic
      (2)
                  
                  
                  84.9
                  %
                  
                  
                  84.2
                  %
                  
                  
                  70
                  bpsNARPAB
      (3)
                  
                  $
                  347
                  
                  
                  $
                  350
                  
                  
                  $
                  (3
                  )Other
      income per avail. bed (4)
                  
                  $
                  23
                  
                  
                  $
                  24
                  
                  
                  $
                  (1
                  )RevPAB
      (5)
                  
                  $
                  370
                  
                  
                  $
                  374
                  
                  
                  $
                  (4
                  )Operating
      expense per bed (6)
                  
                  $
                  173
                  
                  
                  $
                  173
                  
                  
                  $
                  —Operating
      margin (9)
                  
                  
                  53.2
                  %
                  
                  
                  53.8
                  %
                  
                  
                  (60
                  )bpsDesign
      Beds (7)
                  
                  
                  72,762
                  
                  
                  
                  72,762
                  
                  
                  
                  —




(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.





(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/application fees, late fees, termination
      fees, parking fees, transfer fees, damage recovery, utility recovery, and
      other miscellaneous fees.





(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 management fees, 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.





(8)
            This
      information excludes property information related to College Station
      (discontinued operations).





(9)
            Represents
      operating income divided by
revenue.





Total
revenue in the student housing leasing segment was $28,394 for the three months
ended June 30, 2010. This represents an increase of $427, or 1.5%, from the same
period in 2009. The increase in student housing leasing revenue included $716
related to the new communities, University Village on Colvin (Syracuse) and The
Reserve at Saluki Pointe (Carbondale).  In addition revenue at
Place-communities increased 3.7%, or $194, on a 3.3% improvement in occupancies,
a decline in rental rates of approximately 0.1% and a 0.5% increase in other
rental revenue.  These increases were offset by a $483, or 2.2%,
decline in Legacy-community revenue, which was the result of a 2.1% decline in
rental rates, a 0.5% decline in other rental revenue and a 0.4% increase in
occupancy.





Operating
expenses in the student housing leasing segment increased $283, or 2.0%, to
$14,273 for the three months ended June 30, 2010 as compared to the same period
in 2009. The growth in operating expenses was the result of an increase of $236
related to the new communities, University Village on Colvin and The Reserve at
Saluki Pointe, while operating expenses at the Place-communities increased $59
primarily due to higher utilities.  Operating expenses at the
Legacy-communities were relatively flat.


37





Development
consulting services





The
following table represents the development consulting projects that were active
during the three months ended June 30, 2010 and 2009:





Recognized EarningsProject
                                                                                                                                      
                                                                                                                                      Beds
                                                                                                                                      
                                                                                                                                      Fee Type
                                                                                                                                      
                                                                                                                                      2010
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2009
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      DifferenceUniversity
      of Michigan
                                                                                                                                      
                                                                                                                                      896
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      121
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (121
                                                                                                                                      )SUNY
      College of Environmental Science & Forestry
                                                                                                                                      
                                                                                                                                      454
                                                                                                                                      
                                                                                                                                      Development
      Fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      67
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      67Fontainebleu
      Renovation Project
                                                                                                                                      
                                                                                                                                      435
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      4
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (4
                                                                                                                                      )West
      Chester— Phase I
                                                                                                                                      
                                                                                                                                      1,197
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      469
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (469
                                                                                                                                      )Indiana
      University of Pennsylvania — Phase III
                                                                                                                                      
                                                                                                                                      1,084
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      266
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (266
                                                                                                                                      )Indiana
      University of Pennsylvania — Phase IV
                                                                                                                                      
                                                                                                                                      596
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      202
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      53
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      149Colorado
      State University — Pueblo I
                                                                                                                                      
                                                                                                                                      253
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      159
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (159
                                                                                                                                      )Colorado
      State University — Pueblo II
                                                                                                                                      
                                                                                                                                      500
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      154
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      187
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (33
                                                                                                                                      )Miscellaneous
      consulting fees
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      Consulting
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      225
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      225Third-party
      development consulting services
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      648
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      1,259
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (611
                                                                                                                                      )Southern
      Illinois University— Carbondale
                                                                                                                                      
                                                                                                                                      768
                                                                                                                                      
                                                                                                                                      Construction
      oversight fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      51
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (51
                                                                                                                                      )Syracuse
      University
                                                                                                                                      
                                                                                                                                      432
                                                                                                                                      
                                                                                                                                      Development
      fee
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      523
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (523
                                                                                                                                      )Intersegment
      development services
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      —
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      574
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      (574
                                                                                                                                      )Development
      consulting services
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      648
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      1,833
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      (1,185
                                                                                                                                      )





Development
consulting services revenue decreased $1,185, or 64.6%, to $648 for the three
months ended June 30, 2010 as compared to the same period in
2009.  Third-party development consulting revenue declined $611 from
the prior year as credit market conditions in 2009 delayed the financing and the
commencement of construction on previously awarded projects, resulting in only
three active third-party development jobs so far this year. However, the
decrease in active third-party development consulting revenue was offset by $225
in revenue related to consulting services that were unrelated to an active
development project.  The intersegment revenue decline relates to two
internal developments that were completed in the third quarter of
2009.  As these fees relate to development services performed on
projects owned by the Trust, they are eliminated in the accompanying condensed
consolidated financial statements.





General
and administrative expenses increased $93 or 12.4% for the quarter. This
increase is primarily due to an increase in third-party development pursuit
costs of $120 offset by a decrease in payroll and benefits.





Management
services





Total
management services revenue remained essentially flat for the three months ended
June 30, 2010 when compared to the same period in 2009 due to a consistent
number of management contracts each period and relatively flat revenue at those
projects.





General
and administrative costs for our third-party management services segment
increased $100 as compared to the same period in 2009 due to $227 of
severance costs incurred in the second quarter of 2010.  Excluding
these costs general and administrative expenses were reduced 7.4% from the prior
year.


38





Unallocated
corporate expenses





Unallocated
corporate expenses represent general and administrative expenses that are not
allocated to any of our business segments. For the three months ended June 30,
2010, unallocated corporate expenses remained essentially flat at $1,661 for the
quarter.





Nonoperating
expenses





Nonoperating
expenses increased $602 or 4.9% for the three months ended June 30, 2010,
compared to the same period in 2009.  This increase includes an $830
gain on extinguishment of debt in the prior year related to the reduction in
mortgage debt on certain Place-communities and $416 in additional depreciation
and amortization related to the two new communities.  Offsetting these
increases was a decline in interest expense as a result of the July 2009
repayment of the Amended Revolver and a reduction in mortgage debt.





Equity
in earnings of unconsolidated entities





Equity in
earnings of unconsolidated entities represents our share of the net income or
loss related to four investments in unconsolidated entities that own student
housing communities. For the three months ended June 30, 2010, equity in
earnings was $7 compared to $46 in the prior year. The main drivers of the
decrease were a decline in occupancy and an increase in interest expense at our
joint venture property in Greensboro, North Carolina.





Funds
from Operations (FFO)





As
defined by the National Association of Real Estate Investment Trusts (“NAREIT”),
Funds from Operations, 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 funds from operations on the same
basis. We present FFO available to all stockholders and unitholders because we
consider it to be an important supplemental measure of our operating performance
and believe 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 results. As such, we also exclude the impact of noncontrolling
interest in our 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.





We
compute FFO in accordance with standards established by the Board of Governors
of NAREIT in its March 1995 White Paper (as amended in November 1999
and April 2002), which may differ from the methodology for calculating FFO
utilized by other equity REITs and, accordingly, may not be comparable to such
other REITs. Further, FFO does not represent amounts available for management’s
discretionary use because of needed capital replacement or expansion, debt
service obligations or other commitments and uncertainties. We believe that net
income is the most directly comparable GAAP measure to FFO available to
stockholders and unitholders. FFO should not be considered as an alternative to
net income (loss) (computed in accordance with GAAP) as an indicator of our
financial performance or to cash flow from operating activities (computed in
accordance with GAAP) as an indicator of our liquidity, nor is it indicative of
funds available to fund our cash needs, including our ability to make
distributions.


39





The
following table presents a reconciliation of FFO available to our stockholders
and unitholders to net income for the three and six months ended June 30, 2010
and 2009:





Three
      Months Ended June 30,
                          
                          
                          Six
      Months Ended June 30,2010
                          
                          
                          2009
                          
                          
                          2010
                          
                          
                          2009Net
      income (loss) attributable to Education Realty Trust, Inc.
                          
                          $
                          (590
                          )
                          
                          $
                          231
                          
                          
                          $
                          (420
                          )
                          
                          $
                          664Student
      housing property depreciation and amortization of lease
      intangibles
                          
                          
                          7,373
                          
                          
                          
                          6,954
                          
                          
                          
                          14,683
                          
                          
                          
                          13,959Equity
      portion of real estate depreciation and amortization on equity
      investees
                          
                          
                          124
                          
                          
                          
                          122
                          
                          
                          
                          248
                          
                          
                          
                          244Depreciation
      and amortization of discontinued operations
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          25Noncontrolling
      interests
                          
                          
                          (12
                          )
                          
                          
                          (53
                          )
                          
                          
                          199
                          
                          
                          
                          157Funds
      from operations
                          
                          $
                          6,895
                          
                          
                          $
                          7,254
                          
                          
                          $
                          14,710
                          
                          
                          $
                          15,049





Liquidity
and Capital Resources





Second
Amended Revolver, Master Secured Credit Facility and other
indebtedness





On
November 20, 2009, the Operating Partnership entered into a Second Amended
and Restated Credit Agreement (the “Second Amended Revolver”). The Second
Amended Revolver amended and restated the existing secured revolving credit
facility agreement dated March 30, 2006 (the “Amended Revolver”). The previous
facility had a maximum availability of $100,000 and was scheduled to mature on
March 30, 2010. The Second Amended Revolver has a maximum availability of
$95,000 and within the first two years of the date of execution of the agreement
may be, upon satisfaction of certain conditions, expanded to a total of
$150,000.





Availability
under the Second Amended Revolver is limited to a “borrowing base availability”
equal to the lesser of (i) 60% of the property asset value (as defined in
the agreement) of the properties securing the facility and (ii) the loan
amount which would produce a debt service coverage ratio of no less than 1.40.
As of June 30, 2010, our borrowing base was $43,364, we had no amounts
outstanding under the Second Amended Revolver and we had letters of credit
outstanding of $1,500 (see Note 6 to our accompanying condensed consolidated
financial statements); thus, our remaining borrowing base availability was
$41,864.The Trust has
five communities unencumbered by debt of which two are eligible to be included
in the pool of properties pledged as collateral against borrowings under the
Second Amended Revolver.  The Trust estimates that the borrowing base
availability would increase by approximately $10,100 if these two communities
were included.





At June
30, 2010, the Trust had ten properties unencumbered by mortgage
debt.  Five of the ten properties have, however, been pledged as
collateral against any borrowings under our Second Amended
Revolver.





The Trust
serves as the guarantor for any funds borrowed by the Operating Partnership
under the Second Amended Revolver. Additionally, the Second Amended Revolver is
secured by a cross-collateralized, first mortgage lien on five otherwise
unmortgaged properties. The Second Amended Revolver matures on November 20,
2012, provided that the Operating Partnership may extend the maturity date for
one year subject to certain conditions. The interest rate per annum applicable
to the Second Amended Revolver is, at the Operating Partnership’s option, equal
to a base rate or London InterBank Offered Rate (“LIBOR”) plus an applicable
margin based upon our leverage.





The
Second Amended Revolver contains customary affirmative and negative covenants
and contains financial covenants that, among other things, require the Trust and
its subsidiaries to maintain certain minimum ratios of “EBITDA” (earnings before
payment or charges of interest, taxes, depreciation, amortization or
extraordinary items) as compared to interest expense and total fixed charges.
The financial covenants also include consolidated net worth and leverage ratio
tests.





The Trust
is prohibited from making distributions unless either of the following
conditions is met: (a) after giving effect to the distribution, the total
leverage ratio is less than or equal to 65% prior to November 20, 2012, and less
than or equal to 60% thereafter; or (b) the distribution, when considered
along with all other distributions for the last 3 quarters, does not exceed 90%
of funds from operations for the applicable period.





At June
30, 2010, the Trust had outstanding mortgage and construction indebtedness of
$398,645 (excluding unamortized debt premium of $598). $23,895 relates to
construction debt that is disclosed below and $325,775 pertains to outstanding
mortgage debt that is secured by the underlying student housing properties or
leaseholds and bears interest at fixed rates ranging from 4.92% to
6.97%.  The remaining $48,975 bears interest at variable rates based
on the 30-day LIBOR plus an applicable margin (3.67%).


40





At June
30, 2010, we had borrowed $10,759 and $4,310 on construction loans with
availability of $11,000 and $12,285, respectively, related to the development of
a wholly owned student apartment community near Southern Illinois University
(Carbondale) (see Note 7). The loans bear interest equal to LIBOR plus 110 and
200 basis point margins, respectively, and were interest only through June 14,
2010. On June 14, 2010, the Trust paid down $5,013 of the outstanding
construction debt and extended the maturity date until June 28, 2012. Going
forward, annually, a debt service coverage ratio calculated on a rolling
12 months basis, of not less than 1.25 to 1, must be maintained with
principal and interest being repaid on a monthly basis.





At June
30, 2010, the Trust had $8,826 outstanding on a $14,300 construction loan
related to the development of a wholly-owned student apartment community at
Syracuse University (see Note 7 to our accompanying condensed consolidated
financial statements). The loan bears interest equal to LIBOR plus a 110 basis
point margin and is interest only through September 29, 2011. Commencing
with the quarter ended June 30, 2011, and annually thereafter, a debt
service coverage ratio calculated on a rolling 12 month basis, of not less
than 1.25 to 1, must be maintained in order to extend the loan until
September 29, 2013, with principal and interest being repaid on a monthly
basis.





Liquidity
outlook and capital requirements





During
the six months ended June 30, 2010, we generated $12,503 of cash from
operations, received proceeds of $2,078 related to notes receivable, and when
combined with $31,169 of existing cash, we were able to invest $8,275 of capital
into existing communities, distribute $6,250 to our stockholders and
unitholders, repay $5,013 in construction debt and end the quarter with $23,348
of cash.





Our
current liquidity needs include funds for distributions to our stockholders and
unitholders, including those required to maintain our REIT status and satisfy
our current annual distribution target of $0.20 per share/unit, funds for
capital expenditures, funds for debt repayment and, potentially, funds for new
property acquisition and development. We generally expect to meet our short-term
liquidity requirements through cash provided by operations, debt refinancing,
existing cash, recycling capital by way of potential asset sales and raising
additional equity capital.





Distributions
for the six months ended June 30, 2010 totaled $6,250 or $0.10 per weighted
average share/unit, compared to cash provided by operations of $12,503, or $0.22
per weighted average share/unit.  Our current targeted annual dividend
rate is $0.20 per share/unit.





Based on
our closing share price of $6.03 on June 30, 2010, our total enterprise value
was $725,759.  With net debt (total debt less cash) of $375,297 at
June 30, 2010, our debt to enterprise value was 51.7% compared to 57.2% at
December 31, 2009.  With gross assets of $947,083, which excludes
accumulated depreciation of $156,028, our debt to gross assets was 42.1% at June
30, 2010 as compared to 42.9% at December 31, 2009.





Management
believes that it has strengthened the Company’s balance sheet through its
follow-on equity offering in July 2009 and the successful pay down and
refinancing of the debt related to the Place-communities in December
2009.  These steps have relieved near-term pressure on our balance
sheet and, coupled with our current annual dividend rate of $0.20 as established
by our Board of Directors in 2009, the Company is positioned to take advantage
of growth opportunities by way of acquisition and development, both on and off
campus.





As
discussed in Note 2 to the condensed consolidated financial statements, the
Trust implemented an at-the-market equity distribution program during the second
quarter.  The Trust may sell shares of its common stock having an
aggregate offering amount of up to $50,000.  During the quarter ended
June 30, 2010, the Trust sold no shares of common stock pursuant to the equity
distribution program. Sales of common stock will depend upon market conditions
and other factors to be determined by the Trust.




41




An
additional source of capital, subject to appropriate market conditions, is the
targeted disposition of non-strategic properties. We continually assess all of
our properties, the markets in which they are located and the colleges and
universities they serve, to determine if any dispositions are necessary or
appropriate. The net proceeds from the sale of any asset would provide
additional capital which would most likely be used to pay down debt and possibly
finance acquisition/development growth or other operational needs.





We intend
to invest in additional communities only as suitable opportunities arise. We
also plan to develop communities for our ownership and management. In the short
term, we intend to fund any acquisitions or developments with working capital,
borrowings under first mortgage property secured debt, construction loans or our
Second Amended Revolver. We intend to finance property acquisitions and
development projects over the longer term with cash from operations, the
proceeds from potential asset sales, additional issuances of common or preferred
stock, private capital in the form of joint ventures, debt financing and
issuances of units in our Operating Partnership. There can be no assurance,
however, that such funding will be obtained on reasonable terms, or at all,
particularly in light of current capital market conditions.





Our
existing universal shelf registration statement permits us to issue up to
$250,000 in securities, including equity or debt securities, from time to time
in one or more transactions depending on market conditions and
terms.  As of June 30, 2010, $200,000 of securities registered remains
available for issuance.





Predevelopment
expenditures





Our
third-party development consulting activities have historically required us to
fund predevelopment expenditures such as architectural fees, permits and
deposits. Because the closing of a development project’s financing is often
subject to third-party delay, we cannot always predict accurately the liquidity
needs of these activities. We frequently incur these predevelopment expenditures
before a financing commitment has been obtained and, accordingly, bear the risk
of the loss of these predevelopment expenditures if financing cannot ultimately
be arranged on acceptable terms. However, we typically obtain a guarantee of
repayment of these predevelopment expenditures from the project owner, but no
assurance can be given that we would be successful in collecting the amount
guaranteed in the event that project financing is not obtained.





In 2007,
we began developing projects for the Trust’s ownership.  In 2009 we
established the ONE Plan, under which the Company uses its equity and financial
stability to fund and own projects on university land.  We plan to
utilize both to increase self-development activity going forward. We opened two
wholly-owned, self-developed communities in August of 2008 and 2009 which serve
Southern Illinois University and Syracuse University,
respectively.  In July 2010, the University of Texas Board of Regents
selected the Trust to be the ground tenant to develop, own and manage a new
high-rise apartment community near the core of the University of Texas at Austin
campus.  This will be the Trust’s third wholly owned development and
second project under the ONE Plan.   As opposed to our
third-party development services, all exposure to risks and capital requirements
for these developments remain with the Trust.





Long-term
liquidity requirements





Our
long-term liquidity requirements consist primarily of funds necessary for
scheduled debt maturities, renovations and other non-recurring capital
expenditures that are needed periodically for our communities as well as
potential community acquisitions and developments. We expect to meet these needs
through existing working capital, cash provided by operations, additional
borrowings under our Second Amended Revolver, net proceeds from potential asset
sales, the issuance of equity instruments, including common or preferred stock,
Operating Partnership units or additional debt, if market conditions permit. We
believe these sources of capital will be sufficient to provide for our long-term
capital needs. Current market conditions (or a continuing deterioration in such
conditions), however, may make additional capital more expensive for us. There
can be no assurance that we will be able to obtain additional financing under
satisfactory conditions, or at all, or that we will make any investments in
additional communities.  Our Second Amended Revolver is a material
source to satisfy our long-term liquidity requirements. As such, compliance with
the financial and operating debt covenants is material to our
liquidity.


42





Commitments





The
following table summarizes our contractual obligations as of June 30,
2010:





Payment
      due by PeriodLess
      than
                                    
                                    
                                    1-3
                                    
                                    
                                    3-5
                                    
                                    
                                    More
      than 51 Year
                                    
                                    
                                    Years
                                    
                                    
                                    Years
                                    
                                    
                                    Years
                                    
                                    
                                    TotalCommitments
      and Contractual Obligations:Long-Term
      Debt Obligations(1)
                                    
                                    $
                                    2,166
                                    
                                    
                                    $
                                    96,437
                                    
                                    
                                    $
                                    133,143
                                    
                                    
                                    $
                                    166,899
                                    
                                    
                                    $
                                    398,645Contractual
      Interest Obligations(2)
                                    
                                    
                                    10,946
                                    
                                    
                                    
                                    39,539
                                    
                                    
                                    
                                    26,546
                                    
                                    
                                    
                                    24,746
                                    
                                    
                                    
                                    101,777Operating
      Lease and Future Purchase Obligations (3)
                                    
                                    
                                    3,661
                                    
                                    
                                    
                                    9,260
                                    
                                    
                                    
                                    3,353
                                    
                                    
                                    
                                    203
                                    
                                    
                                    
                                    16,477Capital
      Reserve Obligations(4)
                                    
                                    
                                    898
                                    
                                    
                                    
                                    3,523
                                    
                                    
                                    
                                    2,861
                                    
                                    
                                    
                                    3,052
                                    
                                    
                                    
                                    10,334Total
                                    
                                    $
                                    17,671
                                    
                                    
                                    $
                                    148,759
                                    
                                    
                                    $
                                    165,903
                                    
                                    
                                    $
                                    194,900
                                    
                                    
                                    $
                                    527,233





(1)
            Includes
      required monthly principal amortization and amounts due at maturity on
      first mortgage debt secured by student housing properties and amounts due
      under the Second Amended Revolver and construction loan agreements. The
      first mortgage debt does not include $598 of unamortized debt
      premium.





(2)
            Includes
      contractual fixed-rate interest payments as well as estimates of variable
      rate interest payments based on variable interest rates effective as of
      June 30, 2010.  The Trust has $72,870 of variable rate debt as
      of June 30, 2010.





(3)
            Includes
      future minimum lease commitments under operating lease obligations and
      future purchase obligations for
advertising.





(4)
            Includes
      future annual contributions to the capital reserve as required by certain
      mortgage debt.





Distributions





We are
required to distribute 90% of our REIT taxable income (excluding the deduction
for dividends paid and capital gains) on an annual basis in order to qualify as
a REIT for federal income tax purposes. Accordingly, we intend to make, but are
not contractually bound to make, regular quarterly distributions to holders of
our common stock and Operating Partnership units. All such distributions are
authorized at the discretion of our board of directors. We may be required to
use borrowings under our Second Amended Revolver, if necessary, to meet REIT
distribution requirements and maintain our REIT status.  Additionally,
we may make certain distributions consisting of both cash and shares to meet
REIT distribution requirements. We consider market factors and our performance
in addition to REIT requirements in determining distribution
levels.





In
conjunction with our follow-on common stock offering in July of 2009, the board
of directors lowered the annual dividend target from $0.41 to $0.20 per
share/unit effective with the November 16, 2009 dividend.





Our board
of directors declared a second quarter distribution of $0.05 per share of common
stock for the quarter ending on June 30, 2010. The distribution is payable on
August 16, 2010 to stockholders of record at the close of business on July 30,
2010.





Off-Balance
Sheet Arrangements





On
May 10, 2006, the Operating Partnership guaranteed $23,200 of construction
debt held by University Village-Greensboro LLC in order to receive a 25%
ownership stake in the joint venture with College Park
Apartments.  Construction was completed and the student housing
community was occupied in August 2007.  In June of 2010 the
construction loan was refinanced and the Operating Partnership no longer
guarantees the debt.





As of
June 30, 2010, we hold investments in four unconsolidated entities that have
third-party mortgage and construction indebtedness totaling $110,549 at June 30,
2010.  The Trust does not guarantee this debt.





On July
14, 2010, the Trust entered into definitive agreements for the development,
financing and management of a $60,000, 20-story, 572-bed graduate student
housing complex at the Science + Technology Park at Johns Hopkins Medical
Institute (“Johns Hopkins”).  The Trust extended an $18,000 second
mortgage loan to the owner.  In addition the Trust has committed to
provide a guarantee of repayment of a $42,000 third-party construction loan if
such is ultimately obtained.  The Company has also committed to fund
the $42,000 construction loan if such financing cannot be obtained from a
third-party lender.  Accordingly, in the event that the construction
financing is not obtained from a third-party lender, the Company would provide
the entire $60,000 necessary to finance the Project.


43





Inflation





Our
student housing leases typically do not have terms that extend beyond twelve
months. Accordingly, although on a short-term basis we would be required to bear
the impact of rising costs resulting from inflation, we have the opportunity to
raise rental rates at least annually to offset such rising costs. However, our
ability to raise rental rates may be limited by a weak economic environment,
increased competition from new student housing in our primary markets and/or a
reduction in student enrollment at our principal colleges and
universities.





Item 3.
Quantitative and Qualitative Disclosures about Market Risk.





Our
future income, cash flows and fair values relevant to financial instruments are
dependent upon prevailing market interest rates. Market risk refers to the risk
of loss from adverse changes in market prices and interest rates. The Trust’s
interest rate risk objective is to limit the impact of interest rate
fluctuations on earnings and cash flows and to lower its overall borrowing
costs. To achieve this objective, the Trust manages its exposure to fluctuations
in market interest rates for its borrowings through the use of fixed rate debt
instruments to the extent that reasonably favorable rates are
obtainable.





For fixed
rate debt, interest rate changes affect the fair market value but do not impact
net income to common stockholders or cash flows. Conversely, for floating rate
debt, interest changes generally do not affect the fair market value but do
impact net income to common stockholders and cash flows, assuming other factors
are held constant. At June 30, 2010, we had fixed rate debt of $325,775. Holding
other variables constant a 100 basis point increase in interest rates would
cause a $13,499 decline in the fair value for our fixed rate debt. Conversely, a
100 basis point decrease in interest rates would cause a $14,404 increase in the
fair value of our fixed rate debt. At June 30, 2010, 81.7% of the outstanding
principal amounts of our mortgage notes payable on the properties we own have
fixed interest rates with a weighted average rate of 5.91% and an average term
to maturity of 5.11 years.





At June
30, 2010, we had borrowed $10,759 and $4,310 on construction loans with
availability of $11,000 and $12,285, respectively, related to the development of
a wholly owned student apartment community near Southern Illinois University
(Carbondale). The loans bear interest equal to LIBOR plus 110 and 200 basis
point margins, respectively, and were interest only through June 14, 2010. On
June 14, 2010, the Trust paid down $5,013 of the outstanding construction debt
and extended the maturity date until June 28, 2012. Going forward, annually, a
debt service coverage ratio calculated on a rolling 12 months basis, of not
less than 1.25 to 1, must be maintained with principal and interest being repaid
on a monthly basis.





At June
30, 2010, the Trust had $8,826 outstanding on a $14,300 construction loan
related to the development of a wholly-owned student apartment community at
Syracuse University. The loan bears interest equal to LIBOR plus a 110 basis
point margin and is interest only through September 29, 2011. Commencing
with the quarter ended June 30, 2011, and annually thereafter, a debt
service coverage ratio calculated on a rolling 12 month basis, of not less
than 1.25 to 1, must be maintained in order to extend the loan until
September 29, 2013, with principal and interest being repaid on a monthly
basis.





Additionally,
in 2008, we borrowed $49,874 to refinance mortgage debt. The loans bear interest
at 30-day LIBOR plus an applicable margin and mature on January 1,
2014.  At June 30, 2010, $48,975 remained outstanding on this variable
rate debt.  In order to hedge the interest rate risk associated with
these loans, the Operating Partnership purchased an interest rate cap from the
Royal Bank of Canada on December 22, 2008 for $120.  The interest rate
cap effectively limits the interest rate on $49,874 of the refinanced mortgage
debt at 7.0% per annum through December 31, 2013. The Operating Partnership has
chosen not to designate the cap as a hedge and will recognize all gain or loss
associated with this derivative instrument in earnings.





We do
not, and do not expect to, use derivatives for trading or speculative purposes,
and we expect to enter into contracts only with major financial
institutions.


44





Item 4.
Controls and Procedures.





Management’s
Evaluation of Disclosure Controls and Procedures





The Trust
maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the Trust’s filings under the Securities
Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms and to
ensure that such information is accumulated and communicated to the Trust’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. The
Trust also has investments in unconsolidated entities which are not under its
control. Consequently, the Trust’s disclosure controls and procedures with
respect to these entities are necessarily more limited than those it maintains
with respect to its consolidated subsidiaries.





Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the design and operation
of the Trust’s disclosure controls and procedures pursuant to
Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on their
evaluation as of June 30, 2010, our Chief Executive Officer and Chief Financial
Officer have concluded that the Trust’s disclosure controls and procedures were
effective.





Changes
in Internal Control Over Financial Reporting





During
the three months ended June 30, 2010, the Trust continued with the
implementation of a financial reporting analyses package. There were no other
changes in the Trust’s internal control over financial reporting that materially
affected, or are reasonably likely to materially affect, the Trust’s internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act).





PART
II





OTHER
INFORMATION





Item 1.
Legal Proceedings





In the
normal course of business, we are subject to claims, lawsuits and legal
proceedings. While it is not possible to ascertain the ultimate outcome of such
matters, in management’s opinion, the liabilities, if any, in excess of amounts
provided or covered by insurance, are not expected to have a material adverse
effect on our financial position, results of operations or
liquidity.





Item 1A.
Risk factors





The
discussion of the Trust’s business and operations should be read together with
the risk factors contained in Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2009 and in Part II, Item 1A of our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2010 which describe various
risks and uncertainties to which we are or may be subject. These risks and
uncertainties have the potential to affect the Trust’s business, financial
condition, results of operations, cash flows and prospects in a material adverse
manner.


45





Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds





Issuer Purchases of Equity
Securities





During
the three months ended June 30, 2010, in connection with our Amended and
Restated Dividend Reinvestment and Stock Purchase Plan (“DRSPP”) for our common
stockholders, we directed the plan administrator to purchase 352 shares of our
common stock for approximately $2 in the open market pursuant to the dividend
reinvestment component of the plan with respect to our dividend for the second
quarter of 2010.  We also directed the plan administrator to purchase
1,651 shares of our common stock for approximately $11 in the open market for
investors pursuant to the direct stock purchase component of the
plan.  The following chart summarizes these purchases of our common
stock for the three months ended June 30, 2010.





Period
                  
                  Total Number
                    of Shares
                    Purchased(1)
                  
                  
                  Average Price Paid per
                    Share
                  
                  
                  Total Number of
                    Shares Purchased as
                    Part of Publicly
                    Announced Plans or
                    Programs
                  
                  
                  Maximum
                    Number (or
                    Approximate
                    Dollar Value) of
                    Shares that May
                    Yet Be
                    Purchased
                    Under the Plans
                    or ProgramsApril
      1-30, 2010
                  
                  
                  357
                  
                  
                  $
                  6.71
                  
                  
                  
                  ―
                  
                  
                  
                  ―May
      1-31, 2010
                  
                  
                  827
                  
                  
                  
                  6.94
                  
                  
                  
                  ―
                  
                  
                  
                  ―June 1-30, 2010
                  
                  
                  819
                  
                  
                  
                  6.65
                  
                  
                  
                  ―
                  
                  
                  
                  ―Total
                  
                  
                  2,003
                  
                  
                  $
                  6.78
                  
                  
                  
                  ―
                  
                  
                  
                  ―




(1)All shares purchased in
the open market pursuant to the terms of our DRSPP. Our board of directors
authorized the issuance or purchase of 4,000,000 shares of common stock under
the DRSPP.


46





Item 3.
Defaults upon Senior Securities.





None.





Item 4.
[Removed and Reserved.]





Item 5. Other Information.





As
previously announced in the Trust’s Current Report on Form 8-K which was filed
with the SEC on July 19, 2010, the Trust will file the construction loan and
guaranty, as applicable, relating to the Johns Hopkins project when such
agreements have been finalized and executed. See “Trends and Outlooks –
Development consulting services” and “Off-Balance Sheet
Arrangements.”





Item 6.
Exhibits.





The exhibits listed on the accompanying
Exhibit Index are filed, furnishedor incorporated by reference (as
stated therein) as part of
this Report.




47




SIGNATURES





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 thereunto
duly authorized.





EDUCATION
      REALTY TRUST, INC.Date:
      August 5, 2010
                  
                  By /s/ Randy ChurcheyRandy
      ChurcheyPresident,
      Chief Executive Officer andDirector
      (Principal Executive Officer)Date:
      August 5, 2010
                  
                  By /s/ Randall H. BrownRandall H.
      BrownExecutive
      Vice President, Chief FinancialOfficer,
      Treasurer and Secretary(Principal
      Financial Officer)Date:
      August 5, 2010
                  
                  By /s/ J. Drew KoesterJ. Drew
      KoesterVice
      President, Assistant Secretary and Chief Accounting
Officer(Principal
      Accounting Officer)




48


EXHIBIT
INDEX





Exhibit
      No.3.1
            
            Second
      Articles of Amendment and Restatement of Education Realty Trust, Inc.
      (Incorporated by reference to Exhibit 3.1 to the Trust’s Amendment No. 2
      to its Registration Statement on Form S-11 (File No. 333-119264), filed on
      December 10, 2004).3.2
            
            Amended
      and Restated Bylaws of Education Realty Trust, Inc. (Incorporated by
      reference to Exhibit 3.2 to the Trust’s Current Report on Form 8-K, filed
      on February 20, 2009).4.1
            
            Form
      of Certificate for Common Stock of Education Realty Trust, Inc.
      (Incorporated by reference to Exhibit 4.1 to the Trust’s Annual Report on
      Form 10-K, filed on March 16, 2010).10.1
            
            Education
      Realty Trust, Inc. Restricted Stock Award Agreement, dated April 13, 2010,
      between Education Realty Trust, Inc. and Randall L. Churchey (Incorporated
      by reference to Exhibit 10.1 the Trust’s Current Report on Form 8-K, filed
      on April 14, 2010).10.2
            
            Equity
      Distribution Agreement, dated June 2, 2010, between Education Realty
      Trust, Inc., Education Realty Operating Partnership, LP and KeyBanc
      Capital Markets Inc. (Incorporated by reference to Exhibit 1.1 the Trust’s
      Current Report on Form 8-K, filed on June 2, 2010).10.3
            
            Equity
      Distribution Agreement, dated June 2, 2010, between Education Realty
      Trust, Inc., Education Realty Operating Partnership, LP and UBS Securities
      LLC (Incorporated by reference to Exhibit 1.2 the Trust’s Current Report
      on Form 8-K, filed on June 2, 2010).10.4
            
            Second
      Mortgage (filed herewith).12
            
            Statement
      Regarding Computation of Ratios (filed herewith).31.1
            
            Certification
      Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
      (filed herewith).31.2
            
            Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
      (filed herewith).32.1
            
            Chief
      Executive Officer certification pursuant to 18 U.S.C. Section 1350,
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).32.2
            
            Chief
      Financial Officer certification pursuant to 18 U.S.C. Section 1350,
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).




49