##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark
One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission File Number: 001-32417
 Education Realty Trust, Inc.
  Maryland
    
    20-1352180(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)530 Oak Court Drive, Suite 300, Memphis, Tennessee
    
    38117(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code): (901)259-2500
 þ   o
  o þ o
 o þ




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##### 



EDUCATION REALTY TRUST, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2007
TABLE OF CONTENTS
 PagePART IFINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    2Condensed Consolidated Balance Sheets of Education Realty Trust, Inc. and Subsidiaries as of
September 30, 2007 and December 31, 2006
    
    
    2Condensed Consolidated Statements of Operations of Education Realty Trust, Inc. and
Subsidiaries for the nine months ended September 30, 2007 and 2006
    
    
    3Condensed Consolidated Statements of Operations of Education Realty Trust, Inc. and
Subsidiaries for the three months ended September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows of Education Realty Trust, Inc. and
Subsidiaries for the nine months ended September 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATION
    
    
    36Item 1. Legal Proceedings
    
    
    36Item 1A. Risk Factors
    
    
    36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3. Defaults Upon Senior Securities
    
    
    36Item 4. Submission of Matters to a Vote of Security Holders
    
    
    36Item 5. Other Information
    
    
    36Item 6. Exhibits
    
    
    36SignaturesEX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32.1 SECTION 906 CERTIFICATION OF CEOEX-32.2 SECTION 906 CERTIFICATION OF CFO
  1




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Financial Statements.
 EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  September 30, 2007
    
    
    December 31, 2006(Unaudited)AssetsStudent housing properties, net
    
    $
    738,788
    
    
    $
    804,759Assets under development
    
    
    2,457
    
    
    
    Corporate office furniture, net
    
    
    1,782
    
    
    
    752Cash and cash equivalents
    
    
    3,171
    
    
    
    6,427Restricted cash
    
    
    9,534
    
    
    
    9,154Student contracts receivable, net
    
    
    185
    
    
    
    227Receivable from affiliate
    
    
    428
    
    
    
    369Management fee receivable from third party
    
    
    630
    
    
    
    669Goodwill and other intangibles, net
    
    
    3,540
    
    
    
    3,649Other assets
    
    
    10,127
    
    
    
    9,452Total assets
    
    $
    770,642
    
    
    $
    835,458Liabilities and stockholders equityLiabilities:Mortgage loans, net of unamortized premium/discount
    
    $
    422,071
    
    
    $
    423,933Term loan
    
    
    
    
    
    
    47,000Revolving line of credit
    
    
    2,200
    
    
    
    22,400Accounts payable and accrued expenses
    
    
    14,423
    
    
    
    10,764Deferred revenue
    
    
    10,997
    
    
    
    9,073Total liabilities
    
    
    449,691
    
    
    
    513,170Minority interest
    
    
    18,108
    
    
    
    19,289Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, $.01 par value, 200,000,000 shares
authorized, 28,422,849 and 26,810,552 shares
issued and outstanding at September 30, 2007 and
December 31, 2006, respectively
    
    
    284
    
    
    
    268Preferred shares, $0.01 par value, 50,000,000
shares authorized, no shares issued and
outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    336,676
    
    
    
    330,374Warrants
    
    
    
    
    
    
    375Accumulated deficit
    
    
    (34,117
    )
    
    
    (28,018
    )Total stockholders equity
    
    
    302,843
    
    
    
    302,999Total liabilities and stockholders equity
    
    $
    770,642
    
    
    $
    835,458
 See accompanying notes to the condensed consolidated financial statements.
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##### Table of Contents



EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2007
    
    
    2006Revenues:Student housing leasing revenue
    
    $
    62,381
    
    
    $
    58,723Student housing food service revenue
    
    
    1,744
    
    
    
    2,670Other leasing revenue
    
    
    10,377
    
    
    
    10,577Third-party development services
    
    
    3,354
    
    
    
    2,283Third-party management services
    
    
    2,447
    
    
    
    2,051Operating expense reimbursements
    
    
    7,055
    
    
    
    5,891Total revenues
    
    
    87,358
    
    
    
    82,195Operating expenses:Student housing leasing operations
    
    
    31,227
    
    
    
    29,706Student housing food service operations
    
    
    1,683
    
    
    
    2,427General and administrative
    
    
    10,789
    
    
    
    9,037Depreciation and amortization
    
    
    24,009
    
    
    
    25,904Reimbursable operating expenses
    
    
    7,055
    
    
    
    5,891Total operating expenses
    
    
    74,763
    
    
    
    72,965Operating income
    
    
    12,595
    
    
    
    9,230Nonoperating expenses:Interest expense
    
    
    20,676
    
    
    
    21,682Amortization of deferred financing costs
    
    
    792
    
    
    
    834Loss on early repayment of debt
    
    
    174
    
    
    
    Interest income
    
    
    (353
    )
    
    
    (439
    )Total nonoperating expenses
    
    
    21,289
    
    
    
    22,077Loss before equity in earnings of unconsolidated entities, income taxes,
minority interest and discontinued operations
    
    
    (8,694
    )
    
    
    (12,847
    )Equity in earnings (losses) of unconsolidated entities
    
    
    (245
    )
    
    
    573Loss before income taxes, minority interest and discontinued operations
    
    
    (8,939
    )
    
    
    (12,274
    )Income tax expense (benefit)
    
    
    (103
    )
    
    
    463Net loss before minority interest and discontinued operations
    
    
    (8,836
    )
    
    
    (12,737
    )Minority interest
    
    
    (341
    )
    
    
    (585
    )Loss from continuing operations
    
    
    (8,495
    )
    
    
    (12,152
    )Discontinued operations:Income from discontinued operations, net of minority interest of $35 and
$36, respectively
    
    
    817
    
    
    
    669Gain on sale of student housing property, net of minority interest of $65
    
    
    1,579
    
    
    
    Income from discontinued operations
    
    
    2,396
    
    
    
    669Net loss
    
    $
    (6,099
    )
    
    $
    (11,483
    )Earnings per share informationIncome (loss) per share  basic and diluted:Continuing operations
    
    $
    (0.30
    )
    
    $
    (0.46
    )Discontinued operations
    
    
    .08
    
    
    
    0.02Net loss per share
    
    $
    (0.22
    )
    
    $
    (0.44
    )Weighted average common shares outstanding  basic and diluted
    
    
    27,869,054
    
    
    
    26,336,343Distributions per common share
    
    $
    0.6150
    
    
    $
    0.8925
 See accompanying notes to the condensed consolidated financial statements.
 3




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EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Three months
    
    
    Three monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2007
    
    
    2006Revenues:Student housing leasing revenue
    
    $
    19,378
    
    
    $
    18,166Student housing food service revenue
    
    
    642
    
    
    
    895Other leasing revenue
    
    
    3,509
    
    
    
    3,709Third-party development services
    
    
    1,287
    
    
    
    856Third-party management services
    
    
    844
    
    
    
    653Operating expense reimbursements
    
    
    2,672
    
    
    
    2,146Total revenues
    
    
    28,332
    
    
    
    26,425Operating expenses:Student housing leasing operations
    
    
    12,803
    
    
    
    12,344Student housing food service operations
    
    
    611
    
    
    
    844General and administrative
    
    
    3,739
    
    
    
    2,872Depreciation and amortization
    
    
    8,005
    
    
    
    8,680Reimbursable operating expenses
    
    
    2,672
    
    
    
    2,146Total operating expenses
    
    
    27,830
    
    
    
    26,886Operating income (loss)
    
    
    502
    
    
    
    (461
    )Nonoperating expenses:Interest expense
    
    
    6,290
    
    
    
    7,551Amortization of deferred financing costs
    
    
    244
    
    
    
    281Interest income
    
    
    (102
    )
    
    
    (101
    )Total nonoperating expenses
    
    
    6,432
    
    
    
    7,731Loss before equity in earnings of unconsolidated entities, income taxes, minority
interest and discontinued operations
    
    
    (5,930
    )
    
    
    (8,192
    )Equity in earnings (losses) of unconsolidated entities
    
    
    (247
    )
    
    
    148Loss before income taxes, minority interest and discontinued operations
    
    
    (6,177
    )
    
    
    (8,044
    )Income tax expense (benefit)
    
    
    (54
    )
    
    
    381Net loss before minority interest and discontinued operations
    
    
    (6,123
    )
    
    
    (8,425
    )Minority interest
    
    
    (337
    )
    
    
    (471
    )Loss from continuing operations
    
    
    (5,786
    )
    
    
    (7,954
    )Loss from discontinued operations, net of minority interest of $0 and $(13), respectively
    
    
    (16
    )
    
    
    (235
    )Net loss
    
    $
    (5,802
    )
    
    $
    (8,189
    )Earnings per share informationLoss per share  basic and diluted:Continuing operations
    
    $
    (0.20
    )
    
    $
    (0.30
    )Discontinued operations
    
    
    (0.00
    )
    
    
    (0.01
    )Loss per share
    
    $
    (0.20
    )
    
    $
    (0.31
    )Weighted average common shares outstanding  basic and diluted
    
    
    28,418,349
    
    
    
    26,390,417Distributions per common share
    
    $
    0.2050
    
    
    $
    0.2975
 See accompanying notes to the condensed consolidated financial statements.
 4




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##### Table of Contents



EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
   Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2007
    
    
    2006Operating activities:Net loss
    
    $
    (6,099
    )
    
    $
    (11,483
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    24,009
    
    
    
    25,904Depreciation included in discontinued operations
    
    
    711
    
    
    
    1,541Deferred taxes
    
    
    (631
    )
    
    
    249Gain on disposal of assets
    
    
    
    
    
    
    (10
    )Gain on sale of student housing property
    
    
    (1,644
    )
    
    
    Loss on early repayment of debt
    
    
    138
    
    
    
    Amortization of deferred financing costs
    
    
    792
    
    
    
    834Amortization of unamortized debt premiums/discounts
    
    
    (407
    )
    
    
    (413
    )Distributions of earnings from unconsolidated entities
    
    
    339
    
    
    
    658Noncash compensation expense related to PIUs and restricted stock
    
    
    593
    
    
    
    622Equity in earnings of unconsolidated entities
    
    
    245
    
    
    
    (573
    )Minority interest in continuing operations
    
    
    (341
    )
    
    
    (585
    )Minority interest in discontinued operations
    
    
    100
    
    
    
    35Change in operating assets and liabilities (net of student housing
acquisitions/disposals)
    
    
    5,270
    
    
    
    3,001Net cash provided by operating activities
    
    
    23,075
    
    
    
    19,780Investing activities:Property acquisitions, net of cash acquired
    
    
    
    
    
    
    (112,694
    )Deferred acquisition costs and earnest money deposits
    
    
    
    
    
    
    (468
    )Purchase of corporate furniture and fixtures
    
    
    (1,380
    )
    
    
    (63
    )Restricted cash
    
    
    (380
    )
    
    
    (2,593
    )Insurance proceeds on property loss
    
    
    
    
    
    
    184Investment in student housing properties
    
    
    (6,093
    )
    
    
    (3,669
    )Proceeds from sale of student housing property
    
    
    48,942
    
    
    
    Investment in assets under development
    
    
    (2,457
    )
    
    
    Investment in joint ventures
    
    
    (178
    )
    
    
    (1,021
    )Net cash provided by (used in) investing activities
    
    
    38,454
    
    
    
    (120,324
    )Financing activities:Payment of mortgage notes
    
    
    (59,204
    )
    
    
    (1,402
    )Borrowings of mortgage notes
    
    
    57,800
    
    
    
    Borrowing (repayment) of term loan
    
    
    (47,000
    )
    
    
    50,000Borrowing (repayment) of line of credit, net
    
    
    (20,200
    )
    
    
    20,800Debt issuance costs
    
    
    (549
    )
    
    
    (1,350
    )Proceeds (payments) from issuance of common stock
    
    
    22,428
    
    
    
    (125
    )Dividends and distributions paid
    
    
    (18,060
    )
    
    
    (25,133
    )Redemption of minority interest
    
    
    
    
    
    
    (8
    )Net cash provided by (used in) financing activities
    
    
    (64,785
    )
    
    
    42,782Net decrease in cash and cash equivalents
    
    
    (3,256
    )
    
    
    (57,762
    )Cash and cash equivalents, beginning of period
    
    
    6,427
    
    
    
    61,662Cash and cash equivalents, end of period
    
    $
    3,171
    
    
    $
    3,900
 See accompanying notes to the condensed consolidated financial statements.
 5




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##### Table of Contents



Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2007
    
    
    2006Supplemental disclosure of cash flow information:Interest paid
    
    $
    20,965
    
    
    $
    21,501Income taxes paid
    
    $
    632
    
    
    $
    855Supplemental disclosure of noncash activities:Prepaid acquisition costs
    
    $
    
    
    
    $
    4,718Warrants expired
    
    
    375
    
    
    
    Redemption of minority interest to satisfy loan to unitholder
    
    
    
    
    
    
    6,116Common stock issued under the dividend
reinvestment plan
    
    
    78
    
    
    
    
 See accompanying notes to the condensed consolidated financial statements.
 6




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##### Table of Contents



EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   1. Organization and description of business
    
    
    Allen & OHara Education Services, Inc. (AOES), a Delaware corporation performing
student housing management activities.
    
    Allen & OHara Development Company, LLC (AODC), a Delaware limited liability company
providing development consulting services for third party student housing properties.
  2. Summary of significant accounting policies
 Basis of presentation and principles of consolidation
    Reclassifications
  Interim financial information
  7




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##### Table of Contents



Use of estimates
  Cash and cash equivalents
  Restricted cash
  Distributions
  Student housing properties
  Business
Combinations,
 Accounting for the Impairment and Disposal of Long-lived Assets.
  8




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##### Table of Contents



Repairs, maintenance, and major improvements
  Investment in unconsolidated joint ventures, limited liability companies, and limited partnerships
  Deferred financing costs
  Issuance costs
  Debt premiums/discounts
  Income taxes
  Accounting for Income Taxes,
 Earnings per share
 Earnings Per
Share.
 Operating Partnership units
    
    
    913,738University Towers Operating Partnership units
    
    
    269,757Restricted Stock (unvested shares)
    
    
    84,117Profits Interest Units
    
    
    275,000Total potentially dilutive securities
    
    
    1,542,612
  9




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##### Table of Contents



Goodwill and other intangible assets
 Goodwill and Other Intangible Assets.
 Minority interests
  Comprehensive Income
 Reporting Comprehensive Income
 Revenue recognition
  Student housing leasing revenue
 Student housing food service revenue
 Other leasing revenue
 Third-party management services revenue
 Third-party development services revenue
 Operating expense reimbursements Income Statement Characterization of Reimbursements Received for Out
of Pocket Expenses Incurred.
 Recent accounting pronouncements
 Accounting for Uncertainty in
 10




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##### Table of Contents



Income Taxes, an Interpretation of FASB Statement No. 109
 Fair Value Measurements .
 The Fair Value Option for Financial Assets and
Financial Liabilities ,
 3. Investments in unconsolidated entities
  
    
    University of Louisville Apartment Developers LLC, a Kentucky limited liability company, 50% owned by AOES
    
    National Development/Allen & OHara CUPA, LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by the Operating Partnership
    
    AODC/CPA, LLC, a Delaware limited liability company, 50% owned by AODC
    
    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
  2007
    
    2006Results of Operations:Revenues
    
    $
    8,871
    
    
    $
    1,418Net income (loss)
    
    
    (3,590
    )
    
    
    1,104Equity in earnings (losses) of unconsolidated entities
    
    $
    (245
    )
    
    $
    573
  4. Debt
 Term loan and revolving credit facility
  11




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##### Table of Contents



Mortgage debt
  Fiscal Year Ending2007 (3 months ended December 31, 2007)
    
    $
    9542008
    
    
    26,4812009
    
    
    285,0502010
    
    
    8882011
    
    
    947Thereafter
    
    
    105,902Total
    
    
    420,222Unamortized debt premium/discounts
    
    
    1,849Outstanding at September 30, 2007, net of unamortized premiums/discounts
    
    $
    422,071
  5. Segments
  12




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Nine months ended September 30, 2007
    
    
    Nine months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing leasing revenue
    
    $
    62,381
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    62,381
    
    
    $
    58,723
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    58,723Student housing food service revenue
    
    
    1,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,744
    
    
    
    2,670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,670Other leasing revenue
    
    
    10,377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,377
    
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,577Third-party development consulting services
    
    
    
    
    
    
    3,354
    
    
    
    
    
    
    
    
    
    
    
    3,354
    
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    
    
    
    
    2,283Third-party management revenue
    
    
    
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    
    
    
    
    2,051
    
    
    
    
    
    
    
    2,051Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    2,545
    
    
    
    (2,545
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,470
    
    
    
    (2,470
    )
    
    
    Operating expense reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891Total revenues
    
    
    74,502
    
    
    
    3,354
    
    
    
    4,992
    
    
    
    4,510
    
    
    
    87,358
    
    
    
    71,970
    
    
    
    2,283
    
    
    
    4,521
    
    
    
    3,421
    
    
    
    82,195Operating Expenses:Student housing leasing operations
    
    
    31,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,227
    
    
    
    29,706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,706Student housing food service operations
    
    
    1,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,683
    
    
    
    2,427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,427General and administrative
    
    
    102
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    
    
    
    
    7,063
    
    
    
    4
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    
    
    
    
    5,258Intersegment expenses
    
    
    2,545
    
    
    
    
    
    
    
    
    
    
    
    (2,545
    )
    
    
    
    
    
    
    2,470
    
    
    
    
    
    
    
    
    
    
    
    (2,470
    )
    
    
    Reimbursable operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891Total operating expenses
    
    
    35,557
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    4,510
    
    
    
    47,028
    
    
    
    34,607
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    3,421
    
    
    
    43,282Net operating income
    
    
    38,945
    
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    40,330
    
    
    
    37,363
    
    
    
    682
    
    
    
    868
    
    
    
    
    
    
    
    38,913Nonoperating
expenses(1)
    
    
    43,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,803
    
    
    
    47,133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,133
 13




---



##### Table of Contents



Nine months ended September 30, 2007
    
    
    Nine months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalIncome (loss) before equity in earnings of unconsolidated entities, income
taxes, minority interest and discontinued operations
    
    
    (4,858
    )
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    (3,473
    )
    
    
    (9,770
    )
    
    
    682
    
    
    
    868
    
    
    
    
    
    
    
    (8,220
    )Equity in earnings of unconsolidated entities
    
    
    (466
    )
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    (245
    )
    
    
    (14
    )
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    573Income (loss) before taxes, minority interest and discontinued operations(3)
    
    $
    (5,324
    )
    
    $
    1,590
    
    
    $
    16
    
    
    $
    
    
    
    $
    (3,718
    )
    
    $
    (9,784
    )
    
    $
    1,269
    
    
    $
    868
    
    
    $
    
    
    
    $
    (7,647
    )Total segment assets, as of September 30, 2007 and December 31, 2006 (2)
    
    $
    755,685
    
    
    $
    3,873
    
    
    $
    7,645
    
    
    $
    
    
    
    $
    767,203
    
    
    $
    818,832
    
    
    $
    2,082
    
    
    $
    5,567
    
    
    $
    
    
    
    $
    826,481
 
 (1)
    
    Nonoperating expenses include interest expense, interest income, amortization of deferred financing costs, depreciation, and amortization of intangibles.(2)
    
    The significant decrease in segment assets related to student housing leasing from that presented at December 31, 2006 relates to the disposition of the
student housing property known as the Village on Tharpe as described in Note 8 and normal depreciation in the first nine months of 2007. The increase
of $1,791 in segment assets related to third party development consulting services is due to an increase of approximately $531 in development fee
receivables and an increase of operating cash at the end of the
current quarter.(3)
    
    The following is a reconciliation of the reportable segments net income before income taxes, minority interest and discontinued operations to the
Trusts consolidated net loss before income taxes, minority interest and discontinued operations: 2007
    
    
    2006Net loss before income taxes, minority interest and discontinued operations for
reportable segments
    
    $
    (3,718
    )
    
    $
    (7,647
    )Other unallocated corporate expenses (4)
    
    
    (5,221
    )
    
    
    (4,627
    )Net loss before income taxes, minority interest and discontinued operations
    
    $
    (8,939
    )
    
    $
    (12,274
    )
 
 (4)
    
    Certain prior period amounts have been reclassified to conform to the current
period presentation. Interest expense of $2,982 related to borrowings on our
revolving line of credit that were used to acquire the Place Portfolio was
previously an unallocated corporate expense. This amount has been reclassified to
the student housing leasing segment for the nine months ended September 30, 2006. 14




---



##### Table of Contents



Three months ended September 30, 2007
    
    
    Three months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing leasing revenue
    
    $
    19,378
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,378
    
    
    $
    18,166
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,166Student housing food service revenue
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895Other leasing revenue
    
    
    3,509
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,509
    
    
    
    3,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,709Third-party development consulting services
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    
    
    
    
    856Third-party management revenue
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    653Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    851
    
    
    
    (851
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    814
    
    
    
    (814
    )
    
    
    Operating expense reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146Total revenues
    
    
    23,529
    
    
    
    1,287
    
    
    
    1,695
    
    
    
    1,821
    
    
    
    28,332
    
    
    
    22,770
    
    
    
    856
    
    
    
    1,467
    
    
    
    1,332
    
    
    
    26,425Operating Expenses:Student housing leasing operations
    
    
    12,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,803
    
    
    
    12,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,344Student housing food service operations
    
    
    611
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611
    
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    844General and administrative
    
    
    16
    
    
    
    714
    
    
    
    1,629
    
    
    
    
    
    
    
    2,359
    
    
    
    
    
    
    
    547
    
    
    
    1,141
    
    
    
    
    
    
    
    1,688Intersegment expenses
    
    
    851
    
    
    
    
    
    
    
    
    
    
    
    (851
    )
    
    
    
    
    
    
    814
    
    
    
    
    
    
    
    
    
    
    
    (814
    )
    
    
    Reimbursable operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146Total operating expenses
    
    
    14,281
    
    
    
    714
    
    
    
    1,629
    
    
    
    1,821
    
    
    
    18,445
    
    
    
    14,002
    
    
    
    547
    
    
    
    1,141
    
    
    
    1,332
    
    
    
    17,022Net operating income
    
    
    9,248
    
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    9,887
    
    
    
    8,768
    
    
    
    309
    
    
    
    326
    
    
    
    
    
    
    
    9,403Nonoperating
expenses(1)
    
    
    14,041
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,041
    
    
    
    16,037
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,037Income (loss) before equity in earnings of unconsolidated entities, income
taxes, minority interest and discontinued operations
    
    
    (4,793
    )
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    (4,154
    )
    
    
    (7,269
    )
    
    
    309
    
    
    
    326
    
    
    
    
    
    
    
    (6,634
    )
 15




---



##### Table of Contents



Three months ended September 30, 2007
    
    
    Three months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalEquity in earnings of unconsolidated entities
    
    
    (261
    )
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    (14
    )
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    148Income (loss) before taxes, minority interest and discontinued operations(2)
    
    $
    (5,054
    )
    
    $
    587
    
    
    $
    66
    
    
    $
    
    
    
    $
    (4,401
    )
    
    $
    (7,283
    )
    
    $
    471
    
    
    $
    326
    
    
    $
    
    
    
    $
    (6,486
    )
 
 (1)
    
    Nonoperating expenses include interest expense, interest income, amortization of deferred financing costs, depreciation, and amortization of intangibles.(2)
    
    The following is a reconciliation of the reportable segments net income before income taxes, minority interest and discontinued operations to the
Trusts consolidated net loss before income taxes, minority interest and discontinued operations: 2007
    
    
    2006Net loss before income taxes, minority interest and discontinued operations for
reportable segments
    
    $
    (4,401
    )
    
    $
    (6,486
    )Other unallocated corporate expenses (3)
    
    
    (1,776
    )
    
    
    (1,558
    )Net loss before income taxes, minority interest and discontinued operations
    
    $
    (6,177
    )
    
    $
    (8,044
    )
 
 (3)
    
    Certain prior period amounts have been reclassified to conform to the current period
presentation. Interest expense of $1,282 related to borrowings on our revolving line of
credit that were used to acquire the Place Portfolio was previously an unallocated corporate
expense. This amount has been reclassified to the student housing leasing segment for the
three months ended September 30, 2006. 6. Commitments and contingencies
       16




---



##### Table of Contents



7. Acquisition of real estate investments
   8. Disposition of real estate investments and discontinued operations
   2007
    
    
    2006Student housing leasing revenue
    
    $
    2,692
    
    
    $
    4,699Student housing leasing operating expenses
    
    
    (1,129
    )
    
    
    (2,453
    )Depreciation and amortization
    
    
    (711
    )
    
    
    (1,541
    )Minority interest in Operating Partnership
    
    
    (35
    )
    
    
    (36
    )Income from discontinued operations (net of minority interest)
    
    $
    817
    
    
    $
    669Gain on sale of student housing property
    
    $
    1,644
    
    
    $
    Minority interest in Operating Partnership
    
    
    (65
    )
    
    
    Gain on sale of student housing property (net of minority interest)
    
    $
    1,579
    
    
    $
    
 9. Incentive plan
    17




---



##### Table of Contents



Accounting for Stock Issued to Employees,
  RestrictedPIUs
    
    Stock
    
    TotalOutstanding at December 31, 2006
    
    
    265,000
    
    
    
    192,000
    
    
    
    457,000Granted
    
    
    7,500
    
    
    
    4,000
    
    
    
    11,500Redeemed
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Outstanding at March 31, 2007
    
    
    270,000
    
    
    
    196,000
    
    
    
    466,000Granted
    
    
    
    
    
    
    4,000
    
    
    
    4,000Redeemed
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Outstanding at June 30, 2007
    
    
    267,500
    
    
    
    200,000
    
    
    
    467,500Granted
    
    
    7,500
    
    
    
    
    
    
    
    7,500Redeemed
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2007
    
    
    275,000
    
    
    
    200,000
    
    
    
    475,000Vested at September 30, 2007
    
    
    275,000
    
    
    
    115,883
    
    
    
    390,883
  10. Subsequent events
  18




---



##### Table of Contents



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. Certain statements contained in this
filing are forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including but not limited to statements related to plans for future
acquisitions, our business and investment strategy, market trends and projected capital
expenditures. When used in this report, the words expect, anticipate, intend, plan,
believe, seek, estimate, would, could, should, and similar expressions are generally
intended to identify forward-looking statements. You should not place undue reliance on these
forward-looking statements, which reflect our opinions only as of the date of this Quarterly
Report. We assume no obligation to update or supplement forward-looking statements that become
untrue because of subsequent events. Forward-looking statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. For further information about these and
other factors that could affect our future results, please see the Item 1A.  Risk Factors in our
Annual Report on Form 10-K for the year ended December 31, 2006. Investors are cautioned that any
forward-looking statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those contemplated by such
forward-looking statements.
 Overview
   Our Business Segments
  Student Housing Leasing
    19




---



##### Table of Contents



Third-Party Management Services
  Third-Party Development Consulting Services
    Trends and Outlook
 Rents and Occupancy
   20




---



##### Table of Contents



General and Administrative Costs
  Critical Accounting Policies
  Student Housing Leasing Revenue Recognition
   Student Housing Food Service Revenue Recognition
  Other Leasing Revenue Recognition
  Revenue and Cost Recognition of Third-Party Development Consulting Services
  21




---



##### Table of Contents



Student Housing Property Acquisitions and Dispositions
  Business Combinations,
  Repairs and Maintenance
  Long Lived Assets  Impairment
 Accounting for the Impairment and
Disposal of Long Lived Assets.
 Recently Issued Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109
 22




---



##### Table of Contents



Fair Value Measurements .
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Results of Operations for the Nine Months Ended September 30, 2007 and 2006
  Nine months ended September 30, 2007
    
    
    Nine months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing leasing revenue
    
    $
    62,381
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    62,381
    
    
    $
    58,723
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    58,723Student housing food service revenue
    
    
    1,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,744
    
    
    
    2,670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,670Other leasing revenue
    
    
    10,377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,377
    
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,577Third-party development consulting services
    
    
    
    
    
    
    3,354
    
    
    
    
    
    
    
    
    
    
    
    3,354
    
    
    
    
    
    
    
    2,283
    
    
    
    
    
    
    
    
    
    
    
    2,283Third-party management revenue
    
    
    
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    
    
    
    
    2,051
    
    
    
    
    
    
    
    2,051Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    2,545
    
    
    
    (2,545
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,470
    
    
    
    (2,470
    )
    
    
    Operating expense reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891Total revenues
    
    
    74,502
    
    
    
    3,354
    
    
    
    4,992
    
    
    
    4,510
    
    
    
    87,358
    
    
    
    71,970
    
    
    
    2,283
    
    
    
    4,521
    
    
    
    3,421
    
    
    
    82,195Operating Expenses:Student housing leasing operations
    
    
    31,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,227
    
    
    
    29,706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,706Student housing food service operations
    
    
    1,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,683
    
    
    
    2,427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,427General and administrative
    
    
    102
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    
    
    
    
    7,063
    
    
    
    4
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    
    
    
    
    5,258Intersegment expenses
    
    
    2,545
    
    
    
    
    
    
    
    
    
    
    
    (2,545
    )
    
    
    
    
    
    
    2,470
    
    
    
    
    
    
    
    
    
    
    
    (2,470
    )
    
    
    
 23




---



##### Table of Contents



Nine months ended September 30, 2007
    
    
    Nine months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalReimbursable operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,891
    
    
    
    5,891Total operating expenses
    
    
    35,557
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    4,510
    
    
    
    47,028
    
    
    
    34,607
    
    
    
    1,601
    
    
    
    3,653
    
    
    
    3,421
    
    
    
    43,282Net operating income
    
    
    38,945
    
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    40,330
    
    
    
    37,363
    
    
    
    682
    
    
    
    868
    
    
    
    
    
    
    
    38,913Nonoperating
expenses(1)
    
    
    43,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,803
    
    
    
    47,133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,133Income (loss) before equity in earnings of unconsolidated entities, income
taxes, minority interest and discontinued operations
    
    
    (4,858
    )
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    (3,473
    )
    
    
    (9,770
    )
    
    
    682
    
    
    
    868
    
    
    
    
    
    
    
    (8,220
    )Equity in earnings of unconsolidated entities
    
    
    (466
    )
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    (245
    )
    
    
    (14
    )
    
    
    587
    
    
    
    
    
    
    
    
    
    
    
    573Income (loss) before taxes, minority interest and discontinued operations(2)
    
    $
    (5,324
    )
    
    $
    1,590
    
    
    $
    16
    
    
    $
    
    
    
    $
    (3,718
    )
    
    $
    (9,784
    )
    
    $
    1,269
    
    
    $
    868
    
    
    $
    
    
    
    $
    (7,647
    )
 
 (1)
    
    Nonoperating expenses include interest expense, interest income, amortization of deferred financing costs, depreciation, and amortization of intangibles.(2)
    
    The following is a reconciliation of the reportable segments net loss before income taxes, minority interest and discontinued operations to the Trusts
consolidated net loss before income taxes, minority interest and discontinued operations: 2007
    
    
    2006Net loss before income taxes, minority interest and discontinued operations for
reportable segments
    
    $
    (3,718
    )
    
    $
    (7,647
    )Other unallocated corporate expenses (3)
    
    
    (5,221
    )
    
    
    (4,627
    )Net loss before income taxes, minority interest and discontinued operations
    
    $
    (8,939
    )
    
    $
    (12,274
    )
 
 (3)
    
    Certain prior period amounts have been reclassified to conform to the current period
presentation. Interest expense of $2,982 related to borrowings on our revolving line of
credit that were used to acquire the Place Portfolio was previously an unallocated corporate
expense. This amount has been reclassified to the student housing leasing segment for the
nine months ended September 30, 2006. 24




---



##### Table of Contents



Student housing leasing
  Nine months
    
    Nine monthsended
    
    endedSeptember 30,
    
    September 30,2007
    
    2006
    
    DifferenceOccupancyPhysical (1)
    
    
    92.8
    %
    
    
    92.2
    %
    
    
    0.6
    %Economic (2)
    
    
    92.2
    %
    
    
    89.0
    %
    
    
    3.2
    %NarPAB (3)
    
    $
    348
    
    
    $
    334
    
    
    $
    14Other income per avail. bed (4)
    
    $
    25
    
    
    $
    24
    
    
    $
    1RevPAB (5)
    
    $
    373
    
    
    $
    358
    
    
    $
    15Operating expense per bed (6)
    
    $
    187
    
    
    $
    181
    
    
    $
    6Operating margin
    
    
    49.9
    %
    
    
    49.4
    %
    
    
    0.5
    %Design Beds (7)
    
    
    167,139
    
    
    
    164,019
    
    
    
    3,120
 
 (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 potential rent for the respective period.(3)
    
    NarPAB represents GAAP net apartment rent for the respective period divided by the sum of the design beds in
the portfolio for each of the included months. Does not include food service revenue or other leasing
revenue.(4)
    
    Represents GAAP-based other 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
income.(5)
    
    RevPAB represents total revenue (net apartment rent plus other income) for the respective period divided by
the sum of the design beds for each of the included months.(6)
    
    Represents property-level operating expense excluding management fees and depreciation and amortization
divided by the sum of the design beds for each of the included months.(7)
    
    Represents the sum of the monthly design beds in the portfolio during the period, excluding Place properties.   25




---



##### Table of Contents



26




---



##### Table of Contents



Third-party development consulting services
  Recognized EarningsProject
    
    Beds
    
    Fee Type
    
    2007
    
    2006
    
    DifferenceSlippery Rock University  Phase I
    
    
    1,390
    
    
    Development fee
    
    $
    46
    
    
    $
    1,264
    
    
    $
    (1,218
    )Indiana University of Pennsylvania
    
    
    734
    
    
    Development fee
    
    
    712
    
    
    
    422
    
    
    
    290University of Michigan
    
    
    896
    
    
    Development fee
    
    
    196
    
    
    
    459
    
    
    
    (263
    )University of North Carolina  Greensboro
    
    
    600
    
    
    Construction oversight fee
    
    
    49
    
    
    
    45
    
    
    
    4University of Louisville  Phase III
    
    
    359
    
    
    Construction oversight fee
    
    
    
    
    
    
    57
    
    
    
    (57
    )University of Alabama  Birmingham
    
    
    753
    
    
    Construction oversight fee
    
    
    
    
    
    
    36
    
    
    
    (36
    )University of Alabama  Tuscaloosa
    
    
    631
    
    
    Development fee
    
    
    978
    
    
    
    
    
    
    
    978Slippery Rock University  Phase II
    
    
    746
    
    
    Development fee
    
    
    713
    
    
    
    
    
    
    
    713Indiana University of Pennsylvania  Phase II
    
    
    1,102
    
    
    Development fee
    
    
    660
    
    
    
    
    
    
    
    660Third-party development consulting services
    
    
    
    
    
    
    
    $
    3,354
    
    
    $
    2,283
    
    
    $
    1,071California University of Pennsylvania  Phase
IV
    
    
    447
    
    
    Development fee
    
    $
    
    
    
    $
    
    
    
    $
    California University of Pennsylvania  Phase V
    
    
    356
    
    
    Development fee
    
    
    118
    
    
    
    225
    
    
    
    (106
    )University of North Carolina  Greensboro
    
    
    600
    
    
    Development fee
    
    
    112
    
    
    
    105
    
    
    
    7University of Louisville  Phase III
    
    
    359
    
    
    Development fee
    
    
    (9
    )
    
    
    124
    
    
    
    (133
    )University of Alabama  Birmingham
    
    
    753
    
    
    Development fee
    
    
    
    
    
    
    133
    
    
    
    (133
    )Equity in earnings of unconsolidated entities
    
    
    
    
    
    
    
    $
    221
    
    
    $
    587
    
    
    $
    (366
    )
    Third-party management services
  27




---



##### Table of Contents



Nonoperating expenses
  Unallocated corporate expenses
  Results of Operations for the Three Months Ended September 30, 2007 and 2006
  Three months ended September 30, 2007
    
    
    Three months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing leasing revenue
    
    $
    19,378
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,378
    
    
    $
    18,166
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,166Student housing food service revenue
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642
    
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895Other leasing revenue
    
    
    3,509
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,509
    
    
    
    3,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,709Third-party development consulting services
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    856
    
    
    
    
    
    
    
    
    
    
    
    856Third-party management revenue
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    653Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    851
    
    
    
    (851
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    814
    
    
    
    (814
    )
    
    
    Operating expense reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146Total revenues
    
    
    23,529
    
    
    
    1,287
    
    
    
    1,695
    
    
    
    1,821
    
    
    
    28,332
    
    
    
    22,770
    
    
    
    856
    
    
    
    1,467
    
    
    
    1,332
    
    
    
    26,425Operating Expenses:Student housing leasing operations
    
    
    12,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,803
    
    
    
    12,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,344
 28




---



##### Table of Contents



Three months ended September 30, 2007
    
    
    Three months ended September 30, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalStudent housing food service operations
    
    
    611
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611
    
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    844General and administrative
    
    
    16
    
    
    
    714
    
    
    
    1,629
    
    
    
    
    
    
    
    2,359
    
    
    
    
    
    
    
    547
    
    
    
    1,141
    
    
    
    
    
    
    
    1,688Intersegment expenses
    
    
    851
    
    
    
    
    
    
    
    
    
    
    
    (851
    )
    
    
    
    
    
    
    814
    
    
    
    
    
    
    
    
    
    
    
    (814
    )
    
    
    Reimbursable operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,146
    
    
    
    2,146Total operating expenses
    
    
    14,281
    
    
    
    714
    
    
    
    1,629
    
    
    
    1,821
    
    
    
    18,445
    
    
    
    14,002
    
    
    
    547
    
    
    
    1,141
    
    
    
    1,332
    
    
    
    17,022Net operating income
    
    
    9,248
    
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    9,887
    
    
    
    8,768
    
    
    
    309
    
    
    
    326
    
    
    
    
    
    
    
    9,403Nonoperating
expenses(1)
    
    
    14,041
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,041
    
    
    
    16,037
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,037Income (loss) before equity in earnings of unconsolidated entities, income
taxes, minority interest and discontinued operations
    
    
    (4,793
    )
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    (4,154
    )
    
    
    (7,269
    )
    
    
    309
    
    
    
    326
    
    
    
    
    
    
    
    (6,634
    )Equity in earnings of unconsolidated entities
    
    
    (261
    )
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    (14
    )
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    148Income (loss) before taxes, minority interest and discontinued operations(2)
    
    $
    (5,054
    )
    
    $
    587
    
    
    $
    66
    
    
    $
    
    
    
    $
    (4,401
    )
    
    $
    (7,283
    )
    
    $
    471
    
    
    $
    326
    
    
    $
    
    
    
    $
    (6,486
    )
 
 (1)
    
    Nonoperating expenses include interest expense, interest income, amortization of deferred financing costs, depreciation, and amortization of intangibles.(2)
    
    The following is a reconciliation of the reportable segments net income before income taxes, minority interest and discontinued operations to the
Trusts consolidated net loss before income taxes, minority interest and discontinued operations: 2007
    
    
    2006Net loss before income taxes, minority interest and discontinued operations for
reportable segments
    
    $
    (4,401
    )
    
    $
    (6,486
    )Other unallocated corporate expenses (3)
    
    
    (1,776
    )
    
    
    (1,558
    )Net loss before income taxes, minority interest and discontinued operations
    
    $
    (6,177
    )
    
    $
    (8,044
    )
 
 (3)
    
    Certain prior period amounts have been reclassified to conform to the current period
presentation. Interest expense of $1,282 related to borrowings on our revolving line of
credit that were used to acquire the Place Portfolio was previously an unallocated corporate
expense. This amount has been reclassified to the student housing leasing segment for the
three months ended September 30, 2006. 29




---



##### Table of Contents



Student housing leasing
  Three months
    
    Three monthsended
    
    endedSeptember 30,
    
    September 30,2007
    
    2006
    
    DifferenceOccupancyPhysical (1)
    
    
    92.2
    %
    
    
    91.7
    %
    
    
    0.5
    %Economic (2)
    
    
    85.7
    %
    
    
    80.7
    %
    
    
    5.0
    %NarPAB (3)
    
    $
    323
    
    
    $
    301
    
    
    $
    22Other income per avail. bed (4)
    
    $
    25
    
    
    $
    25
    
    
    $
    0RevPAB (5)
    
    $
    348
    
    
    $
    326
    
    
    $
    22Operating expense per bed (6)
    
    $
    230
    
    
    $
    222
    
    
    $
    8Operating margin
    
    
    33.9
    %
    
    
    32.0
    %
    
    
    1.9
    %Design Beds (7)
    
    
    55,713
    
    
    
    55,713
    
    
    
    
 
 (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 potential rent for the respective period.(3)
    
    NarPAB represents GAAP net apartment rent for the respective period divided by the sum of the design beds in
the portfolio for each of the included months. Does not include food service revenue or other leasing
revenue.(4)
    
    Represents GAAP-based other 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
income.(5)
    
    RevPAB represents total revenue (net apartment rent plus other income) for the respective period divided by
the sum of the design beds for each of the included months.(6)
    
    Represents property-level operating expense excluding management fees and depreciation and amortization
divided by the sum of the design beds for each of the included months.(7)
    
    Represents the sum of the monthly design beds in the portfolio during the period, excluding Place properties.    Third-party development consulting services
 30




---



##### Table of Contents



Third-party management services
   Nonoperating expenses
  Unallocated corporate expenses
  Funds from Operations
  31




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net loss
    
    $
    (5,802
    )
    
    $
    (8,189
    )
    
    $
    (6,099
    )
    
    $
    (11,483
    )Less gain on sale of student housing property, net of
minority interest
    
    
    
    
    
    
    
    
    
    
    (1,579
    )
    
    
    Plus student housing property depreciation and amortization
of lease intangibles
    
    
    7,824
    
    
    
    8,585
    
    
    
    23,633
    
    
    
    25,638Plus equity portion of real estate depreciation and
amortization on equity investees
    
    
    149
    
    
    
    5
    
    
    
    340
    
    
    
    5Plus depreciation and amortization of discontinued operations
    
    
    
    
    
    
    526
    
    
    
    711
    
    
    
    1,541Plus minority interest
    
    
    (337
    )
    
    
    (485
    )
    
    
    (306
    )
    
    
    (550
    )Funds from operations
    
    $
    1,834
    
    
    $
    442
    
    
    $
    16,700
    
    
    $
    15,151
 Liquidity and Capital Resources
      32




---



##### Table of Contents



Liquidity outlook and capital requirements
        Predevelopment expenditures
  33




---



##### Table of Contents



Long-term liquidity requirements
    Commitments and Contractual obligations
  Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalCommitments and Contractual Obligations:Long-Term Debt Obligations(1)
    
    $
    3,154
    
    
    $
    311,531
    
    
    $
    1,835
    
    
    $
    105,902
    
    
    $
    422,422Contractual Interest Obligations(2)
    
    
    6,330
    
    
    
    41,249
    
    
    
    12,900
    
    
    
    6,270
    
    
    
    66,749Operating Lease and Future Purchase
Obligations (3)
    
    
    774
    
    
    
    4,279
    
    
    
    3,213
    
    
    
    852
    
    
    
    9,118Capital Reserve Obligations(4)
    
    
    1,573
    
    
    
    2,418
    
    
    
    421
    
    
    
    182
    
    
    
    4,594Total
    
    $
    11,831
    
    
    $
    359,477
    
    
    $
    18,369
    
    
    $
    113,206
    
    
    $
    502,883
 
 (1)
    
    Includes required monthly principal amortization and amounts due at maturity on first mortgage debt secured by student
housing properties and principal amortization on the Amended Revolver and the Term Loan. The first mortgage debt does not
include $1,849 of unamortized debt premium.(2)
    
    Includes contractual interest payments.(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
   Off-Balance Sheet Arrangements
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##### Table of Contents



Inflation
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
     
 Item 4. Controls and Procedures.
 Managements Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
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##### Table of Contents



PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk factors
  Financing our future growth plan or refinancing existing debt maturities could be impacted by
negative capital market conditions.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
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##### Table of Contents



SIGNATURES
  EDUCATION REALTY TRUST, INC.Date: November 7, 2007
    
    By /s/ Paul O. BowerPaul O. BowerPresident, Chief Executive Officer andChairman of the Board of Directors(Principal Executive Officer)Date: November 7, 2007
    
    By /s/ Randall H. BrownRandall H. BrownExecutive Vice President, Chief FinancialOfficer, Treasurer and Secretary(Principal Financial Officer)Date: November 7, 2007
    
    By /s/ J. Drew KoesterJ. Drew KoesterVice President and Chief Accounting Officer(Principal Accounting Officer)
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##### Table of Contents



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