##### 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, 2008
 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
(State or other jurisdiction of incorporation or organization)
    
    20-1352180
(I.R.S. Employer Identification No.)530 Oak Court Drive, Suite 300, Memphis, Tennessee
(Address of principal executive offices)
    
    38117
(Zip Code)
 Not Applicable
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



EDUCATION REALTY TRUST, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2008
TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets of Education Realty Trust, Inc. and Subsidiaries as of 
September 30, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations of Education Realty Trust, Inc. and
Subsidiaries for the nine months ended September 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Operations of Education Realty Trust, Inc. and
Subsidiaries for the three months ended September 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows of Education Realty Trust, Inc. and
Subsidiaries for the nine months ended September 30, 2008 and 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    41Item 4. Controls and Procedures
    
    
    42PART II  OTHER INFORMATION
    
    
    42Item 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    42Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3. Defaults Upon Senior Securities
    
    
    44Item 4. Submission of Matters to a Vote of Security Holders
    
    
    44Item 5. Other Information
    
    
    44Item 6. Exhibits
    
    
    45Signatures
    
    
    46Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Financial Statements.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  September 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETSAssets:Student housing properties, net
    
    $
    736,729
    
    
    $
    732,979Assets under development
    
    
    2,883
    
    
    
    5,675Corporate office furniture, net
    
    
    1,498
    
    
    
    1,693Cash and cash equivalents
    
    
    2,756
    
    
    
    4,034Restricted cash
    
    
    10,326
    
    
    
    8,188Student contracts receivable, net
    
    
    515
    
    
    
    329Receivable from affiliate
    
    
    41
    
    
    
    18Management fee receivable from third party
    
    
    451
    
    
    
    606Goodwill and other intangibles, net
    
    
    3,508
    
    
    
    3,531Other assets
    
    
    10,523
    
    
    
    10,407Total assets
    
    $
    769,230
    
    
    $
    767,460LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Mortgage and construction loans, net of unamortized premium/discount
    
    $
    429,013
    
    
    $
    420,940Revolving line of credit
    
    
    18,600
    
    
    
    11,500Accounts payable and accrued expenses
    
    
    15,415
    
    
    
    11,092Accounts payable to affiliate
    
    
    1
    
    
    
    60Deferred revenue
    
    
    13,398
    
    
    
    7,928Total liabilities
    
    
    476,427
    
    
    
    451,520Minority interest
    
    
    14,998
    
    
    
    18,121Commitments and contingencies (see Note 6)
    
    
    
    
    
    
    Stockholders equity:Common stock, $.01 par value, 200,000,000 shares authorized,
28,466,849 and 28,431,855 shares issued and outstanding at
September 30, 2008 and December 31, 2007, respectively
    
    
    285
    
    
    
    284Preferred shares, $0.01 par value, 50,000,000 shares authorized, no
shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    314,006
    
    
    
    330,969Accumulated deficit
    
    
    (36,486
    )
    
    
    (33,434
    )Total stockholders equity
    
    
    277,805
    
    
    
    297,819Total liabilities and stockholders equity
    
    $
    769,230
    
    
    $
    767,460
 See accompanying notes to the condensed consolidated financial statements.
  3




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007Revenues:Student housing leasing revenue
    
    $
    77,829
    
    
    $
    62,381Student housing food service revenue
    
    
    1,804
    
    
    
    1,744Other leasing revenue
    
    
    6,945
    
    
    
    10,377Third-party development services
    
    
    6,224
    
    
    
    3,354Third-party management services
    
    
    2,677
    
    
    
    2,447Operating expense reimbursements
    
    
    8,192
    
    
    
    7,055Total revenues
    
    
    103,671
    
    
    
    87,358Operating expenses:Student housing leasing operations
    
    
    43,064
    
    
    
    31,227Student housing food service operations
    
    
    1,728
    
    
    
    1,683General and administrative
    
    
    11,867
    
    
    
    10,789Depreciation and amortization
    
    
    21,896
    
    
    
    24,009Reimbursable operating expenses
    
    
    8,192
    
    
    
    7,055Total operating expenses
    
    
    86,747
    
    
    
    74,763Operating income
    
    
    16,924
    
    
    
    12,595Nonoperating expenses:Interest expense
    
    
    18,556
    
    
    
    20,676Amortization of deferred financing costs
    
    
    740
    
    
    
    792Loss on early repayment of debt
    
    
    
    
    
    
    174Interest income
    
    
    (267
    )
    
    
    (353
    )Total nonoperating expenses
    
    
    19,029
    
    
    
    21,289Loss before equity in earnings (losses) of unconsolidated entities, income
taxes, minority interest and discontinued operations
    
    
    (2,105
    )
    
    
    (8,694
    )Equity in earnings (losses) of unconsolidated entities
    
    
    (223
    )
    
    
    (245
    )Loss before income taxes, minority interest and discontinued operations
    
    
    (2,328
    )
    
    
    (8,939
    )Income tax expense (benefit)
    
    
    882
    
    
    
    (103
    )Net loss before minority interest and discontinued operations
    
    
    (3,210
    )
    
    
    (8,836
    )Minority interest
    
    
    (158
    )
    
    
    (341
    )Loss from continuing operations
    
    
    (3,052
    )
    
    
    (8,495
    )Discontinued operations:Income from discontinued operations, net of minority interest of $35
    
    
    
    
    
    
    817Gain on sale of student housing property, net of minority interest of $65
    
    
    
    
    
    
    1,579Income from discontinued operations
    
    
    
    
    
    
    2,396Net loss
    
    $
    (3,052
    )
    
    $
    (6,099
    )Earnings per share informationIncome (loss) per share  basic and diluted:Continuing operations
    
    $
    (0.11
    )
    
    $
    (0.30
    )Discontinued operations
    
    
    
    
    
    
    0.08Net loss per share
    
    $
    (0.11
    )
    
    $
    (0.22
    )Weighted average common shares outstanding  basic and diluted
    
    
    28,450,470
    
    
    
    27,869,054Distributions per common share
    
    $
    0.6150
    
    
    $
    0.6150
 See accompanying notes to the condensed consolidated financial statements.
  4




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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Three months
    
    
    Three monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007Revenues:Student housing leasing revenue
    
    $
    24,671
    
    
    $
    19,378Student housing food service revenue
    
    
    608
    
    
    
    642Other leasing revenue
    
    
    
    
    
    
    3,509Third-party development services
    
    
    3,216
    
    
    
    1,287Third-party management services
    
    
    870
    
    
    
    844Operating expense reimbursements
    
    
    3,052
    
    
    
    2,672Total revenues
    
    
    32,417
    
    
    
    28,332Operating expenses:Student housing leasing operations
    
    
    17,833
    
    
    
    12,803Student housing food service operations
    
    
    600
    
    
    
    611General and administrative
    
    
    4,017
    
    
    
    3,739Depreciation and amortization
    
    
    7,079
    
    
    
    8,005Reimbursable operating expenses
    
    
    3,052
    
    
    
    2,672Total operating expenses
    
    
    32,581
    
    
    
    27,830Operating income (loss)
    
    
    (164
    )
    
    
    502Nonoperating expenses:Interest expense
    
    
    6,343
    
    
    
    6,290Amortization of deferred financing costs
    
    
    253
    
    
    
    244Interest income
    
    
    (77
    )
    
    
    (102
    )Total nonoperating expenses
    
    
    6,519
    
    
    
    6,432Loss before equity in earnings (losses) of unconsolidated entities,
income taxes, minority interest and discontinued operations
    
    
    (6,683
    )
    
    
    (5,930
    )Equity in earnings (losses) of unconsolidated entities
    
    
    (196
    )
    
    
    (247
    )Loss before income taxes, minority interest and discontinued operations
    
    
    (6,879
    )
    
    
    (6,177
    )Income tax expense (benefit)
    
    
    709
    
    
    
    (54
    )Net loss before minority interest and discontinued operations
    
    
    (7,588
    )
    
    
    (6,123
    )Minority interest
    
    
    (329
    )
    
    
    (337
    )Loss from continuing operations
    
    
    (7,259
    )
    
    
    (5,786
    )Loss from discontinued operations, net of minority interest of $(13)
    
    
    
    
    
    
    (16
    )Net loss
    
    $
    (7,259
    )
    
    $
    (5,802
    )Earnings per share informationLoss per share  basic and diluted:Continuing operations
    
    $
    (0.26
    )
    
    $
    (0.20
    )Discontinued operations
    
    
    
    
    
    
    Net loss per share
    
    $
    (0.26
    )
    
    $
    (0.20
    )Weighted average common shares outstanding  basic and diluted
    
    
    28,462,349
    
    
    
    28,418,349Distributions per common share
    
    $
    0.2050
    
    
    $
    0.2050
 See accompanying notes to the condensed consolidated financial statements.
  5




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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
   Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007Operating activities:Net loss
    
    $
    (3,052
    )
    
    $
    (6,099
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    21,896
    
    
    
    24,009Depreciation included in discontinued operations
    
    
    
    
    
    
    711Deferred taxes
    
    
    (439
    )
    
    
    (631
    )Loss on disposal of assets
    
    
    519
    
    
    
    Gain on sale of student housing property
    
    
    
    
    
    
    (1,644
    )Loss on early repayment of debt
    
    
    
    
    
    
    138Amortization of deferred financing costs
    
    
    740
    
    
    
    792Amortization of unamortized debt premiums/discounts
    
    
    (366
    )
    
    
    (407
    )Distributions of earnings from unconsolidated entities
    
    
    192
    
    
    
    339Noncash compensation expense related to PIUs and restricted stock
    
    
    597
    
    
    
    593Equity in earnings (losses) of unconsolidated entities
    
    
    223
    
    
    
    245Minority interest in continuing operations
    
    
    (158
    )
    
    
    (341
    )Minority interest in discontinued operations
    
    
    
    
    
    
    100Change in operating assets and liabilities (net of student housing
acquisitions/disposals)
    
    
    9,747
    
    
    
    5,270Net cash provided by operating activities
    
    
    29,899
    
    
    
    23,075Investing activities:Purchase of corporate furniture and fixtures
    
    
    (177
    )
    
    
    (1,380
    )Restricted cash
    
    
    (2,138
    )
    
    
    (380
    )Investment in student housing properties
    
    
    (14,032
    )
    
    
    (6,093
    )Proceeds from sale of assets
    
    
    2,578
    
    
    
    Insurance proceeds received from property damage
    
    
    387
    
    
    
    Proceeds from sale of student housing properties
    
    
    
    
    
    
    48,942Investment in assets under development
    
    
    (13,095
    )
    
    
    (2,457
    )Investment in joint ventures
    
    
    (374
    )
    
    
    (178
    )Net cash provided by (used in) investing activities
    
    
    (26,851
    )
    
    
    38,454Financing activities:Payment of mortgage notes
    
    
    (25,599
    )
    
    
    (59,204
    )Borrowings of mortgage notes and construction loan
    
    
    34,039
    
    
    
    57,800Repayment of term loan
    
    
    
    
    
    
    (47,000
    )Borrowing (repayment) of line of credit, net
    
    
    7,100
    
    
    
    (20,200
    )Debt issuance costs
    
    
    (230
    )
    
    
    (549
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    22,428Dividends and distributions paid
    
    
    (19,636
    )
    
    
    (18,060
    )Net cash used in financing activities
    
    
    (4,326
    )
    
    
    (64,785
    )Net decrease in cash and cash equivalents
    
    
    (1,278
    )
    
    
    (3,256
    )Cash and cash equivalents, beginning of period
    
    
    4,034
    
    
    
    6,427Cash and cash equivalents, end of period
    
    $
    2,756
    
    
    $
    3,171
 See accompanying notes to the condensed consolidated financial statements.
  6




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Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007Supplemental disclosure of cash flow information:Interest paid
    
    $
    19,379
    
    
    $
    20,965Income taxes paid
    
    $
    177
    
    
    $
    632Supplemental disclosure of noncash activities:Warrants expired
    
    $
    
    
    
    $
    375Redemption of minority interest from unit holder
    
    
    893
    
    
    
    Common stock issued under the dividend reinvestment plan
    
    
    
    
    
    
    78
 See accompanying notes to the condensed consolidated financial statements.
  7




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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
    Interim financial information
   8




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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.
  9




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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
   10




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##### Table of Contents



Accounting for Income Taxes
 Accounting for Uncertainty in Income Taxes
 Earnings per share
 Earnings Per Share.
 Operating Partnership units
    
    
    913,738University Towers Operating Partnership units
    
    
    207,257Restricted Stock (unvested shares)
    
    
    48,117Profits Interest Units
    
    
    282,500Total potentially dilutive securities
    
    
    1,451,612
  Goodwill and other intangible assets
 Goodwill and
Other Intangible Assets.
 Minority interests
  Comprehensive Income
 Reporting Comprehensive Income
  11




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##### Table of Contents



Revenue recognition
  Student housing leasing revenue
 Student housing food service revenue
 Other leasing revenue
 Third-party development services revenue
 Third-party management services revenue
 Operating expense reimbursements Income Statement Characterization of Reimbursements Received for Out of Pocket
Expenses Incurred.
  12




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Recently adopted accounting pronouncements
 Fair
Value Measurements .
 The Fair Value Option for Financial Assets and
Financial Liabilities ,
 Recently issued accounting pronouncements
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statementsan amendment of Accounting Research Bulletin No. 51
 Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133 Accounting for Derivative
Instruments and Hedging Activities
 Determination of the Useful
Life of Intangible Assets Goodwill and Other Intangible Assets.
  13




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Determining
Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities Earnings Per Share.
 3. Investments in unconsolidated entities
  
    
    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
  2008
    
    
    2007Results of Operations:Revenues
    
    $
    11,744
    
    
    $
    8,871Net loss
    
    
    (2,107
    )
    
    
    (3,590
    )Equity in earnings (losses) of unconsolidated entities
    
    $
    (223
    )
    
    $
    (245
    )
  4. Debt
 Revolving credit facility
    14




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Mortgage and construction debt
     Fiscal Year Ending2008 (3 months ending December 31, 2008)
    
    $
    8832009
    
    
    285,0492010
    
    
    9482011
    
    
    1,0742012
    
    
    73,978Thereafter
    
    
    65,775Total
    
    
    427,707Unamortized debt premium/discounts
    
    
    1,306Outstanding at September 30, 2008, net of unamortized premiums/discounts
    
    $
    429,013
   15




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##### Table of Contents



5. Segments
  Nine Months Ended September 30, 2008
    
    
    Nine Months Ended September 30, 2007Student
    
    
    Development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    DevelopmentHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    77,829
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    77,829
    
    
    $
    62,381
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    62,381Student housing
food service
revenue
    
    
    1,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,804
    
    
    
    1,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,744Other leasing
revenue
    
    
    6,945
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,945
    
    
    
    10,377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,377Third-party
development
consulting
services
    
    
    
    
    
    
    6,224
    
    
    
    
    
    
    
    
    
    
    
    6,224
    
    
    
    
    
    
    
    3,354
    
    
    
    
    
    
    
    
    
    
    
    3,354Third-party
management
services
    
    
    
    
    
    
    
    
    
    
    2,677
    
    
    
    
    
    
    
    2,677
    
    
    
    
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    2,447Intersegment
revenues
    
    
    
    
    
    
    187
    
    
    
    3,169
    
    
    
    (3,356
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,545
    
    
    
    (2,545
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,192
    
    
    
    8,192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055Total revenues
    
    
    86,578
    
    
    
    6,411
    
    
    
    5,846
    
    
    
    4,836
    
    
    
    103,671
    
    
    
    74,502
    
    
    
    3,354
    
    
    
    4,992
    
    
    
    4,510
    
    
    
    87,358Operating expenses:Student housing
leasing operations
    
    
    43,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,064
    
    
    
    31,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,227Student housing
food service
operations
    
    
    1,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,728
    
    
    
    1,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,683General and
administrative
    
    
    3
    
    
    
    2,521
    
    
    
    5,476
    
    
    
    (277
    )
    
    
    7,723
    
    
    
    102
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    
    
    
    
    7,063Intersegment
expenses
    
    
    3,169
    
    
    
    
    
    
    
    
    
    
    
    (3,169
    )
    
    
    
    
    
    
    2,545
    
    
    
    
    
    
    
    
    
    
    
    (2,545
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,192
    
    
    
    8,192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055Total operating
expenses
    
    
    47,964
    
    
    
    2,,521
    
    
    
    5,476
    
    
    
    4,746
    
    
    
    60,707
    
    
    
    35,557
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    4,510
    
    
    
    47,028Net operating income
    
    
    38,614
    
    
    
    3,,890
    
    
    
    370
    
    
    
    90
    
    
    
    42,964
    
    
    
    38,945
    
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    40,330Nonoperating
expenses(1)
    
    
    40,041
    
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    39,996
    
    
    
    43,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,803Income
(loss) before
equity in earnings
(losses) of
unconsolidated
entities, income
taxes, minority
interest and
discontinued
operations
    
    
    (1,427
    )
    
    
    3,935
    
    
    
    370
    
    
    
    90
    
    
    
    2,968
    
    
    
    (4,858
    )
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    (3,473
    )Equity in earnings
(losses) of
unconsolidated
entities
    
    
    (221
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (223
    )
    
    
    (466
    )
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    (245
    )Income
(loss) before
taxes, minority
interest and
discontinued
operations(2)
    
    $
    (1,648
    )
    
    $
    3,933
    
    
    $
    370
    
    
    $
    90
    
    
    $
    2,745
    
    
    $
    (5,324
    )
    
    $
    1,590
    
    
    $
    16
    
    
    $
    
    
    
    $
    (3,718
    )Total segment
assets, as of
September 30, 2008
and December 31,
2007
    
    $
    756,393
    
    
    $
    3,304
    
    
    $
    5,514
    
    
    $
    
    
    
    $
    765,211
    
    
    $
    751,086
    
    
    $
    4,528
    
    
    $
    6,505
    
    
    $
    
    
    
    $
    762,119
 (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 (loss) taxes, minority interest and discontinued operations to
the Trusts consolidated net loss before income taxes, minority interest and discontinued operations for the nine months ended September 30: 2008
    
    
    2007Net income (loss) before income taxes, minority interest and discontinued operations for reportable segments
    
    $
    2,745
    
    
    $
    (3,718
    )Other unallocated corporate expenses
    
    
    (5,073
    )
    
    
    (5,221
    )Net loss before income taxes, minority interest and discontinued operations
    
    $
    (2,328
    )
    
    $
    (8,939
    )
  16




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##### Table of Contents



Three Months Ended September 30, 2008
    
    
    Three Months Ended September 30, 2007Student
    
    
    Development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    DevelopmentHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    24,671
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    24,671
    
    
    $
    19,378
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,378Student housing
food service
revenue
    
    
    608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642Other leasing
revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,509
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,509Third-party
development
consulting
services
    
    
    
    
    
    
    3,216
    
    
    
    
    
    
    
    
    
    
    
    3,216
    
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    
    
    
    
    1,287Third-party
management
services
    
    
    
    
    
    
    
    
    
    
    870
    
    
    
    
    
    
    
    870
    
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    844Intersegment
revenues
    
    
    
    
    
    
    187
    
    
    
    1,080
    
    
    
    (1,267
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851
    
    
    
    (851
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,052
    
    
    
    3,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672Total revenues
    
    
    25,279
    
    
    
    3,403
    
    
    
    1,950
    
    
    
    1,785
    
    
    
    32,417
    
    
    
    23,529
    
    
    
    1,287
    
    
    
    1,695
    
    
    
    1,821
    
    
    
    28,332Operating expenses:Student housing
leasing operations
    
    
    17,833
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,833
    
    
    
    12,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,803Student housing
food service
operations
    
    
    600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600
    
    
    
    611
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611General and
administrative
    
    
    
    
    
    
    866
    
    
    
    1,897
    
    
    
    (76
    )
    
    
    2,687
    
    
    
    16
    
    
    
    714
    
    
    
    1,629
    
    
    
    
    
    
    
    2,359Intersegment
expenses
    
    
    1,080
    
    
    
    
    
    
    
    
    
    
    
    (1,080
    )
    
    
    
    
    
    
    851
    
    
    
    
    
    
    
    
    
    
    
    (851
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,052
    
    
    
    3,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672Total operating
expenses
    
    
    19,513
    
    
    
    866
    
    
    
    1,897
    
    
    
    1,896
    
    
    
    24,172
    
    
    
    14,281
    
    
    
    714
    
    
    
    1,629
    
    
    
    1,821
    
    
    
    18,445Net operating income
    
    
    5,766
    
    
    
    2,537
    
    
    
    53
    
    
    
    (111
    )
    
    
    8,245
    
    
    
    9,248
    
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    9,887Nonoperating
expenses(1)
    
    
    13,143
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    13,139
    
    
    
    14,041
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,041Income
(loss) before
equity in earnings
(losses) of
unconsolidated
entities, income
taxes, minority
interest and
discontinued
operations
    
    
    (7,377
    )
    
    
    2,541
    
    
    
    53
    
    
    
    (111
    )
    
    
    (4,894
    )
    
    
    (4,793
    )
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    (4,154
    )Equity in earnings
(losses) of
unconsolidated
entities
    
    
    (195
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (196
    )
    
    
    (261
    )
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (247
    )Income
(loss) before
taxes, minority
interest and
discontinued
operations(2)
    
    $
    (7,572
    )
    
    $
    2,540
    
    
    $
    53
    
    
    $
    (111
    )
    
    $
    (5,090
    )
    
    $
    (5,054
    )
    
    $
    587
    
    
    $
    66
    
    
    $
    
    
    
    $
    (4,401
    )
 (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 (loss) before income taxes, minority interest and discontinued operations to
the Trusts consolidated net loss before income taxes, minority interest and discontinued operations for the three months ended September 30: 2008
    
    
    2007Net loss before income taxes, minority interest and discontinued operations for reportable segments
    
    $
    (5,090
    )
    
    $
    (4,401
    )Other unallocated corporate expenses
    
    
    (1,789
    )
    
    
    (1,776
    )Net loss before income taxes, minority interest and discontinued operations
    
    $
    (6,879
    )
    
    $
    (6,177
    )
  17




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##### Table of Contents



6. Commitments and contingencies
          18




---



##### Table of Contents



7. Acquisition of real estate investments
    8. Disposition of real estate investments and discontinued operations
   2007Student housing leasing revenue
    
    $
    2,692Student housing leasing operating expenses
    
    
    (1,129
    )Depreciation and amortization
    
    
    (711
    )Minority interest
    
    
    (35
    )Income from discontinued operations (net of minority interest)
    
    $
    817Gain on sale of student housing property
    
    $
    1,644Minority interest
    
    
    (65
    )Gain on sale of student housing property (net of minority interest)
    
    $
    1,579
 9. Incentive plan
    19




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##### Table of Contents



StockPIUs
    
    
    Awards (1)
    
    
    TotalOutstanding at December 31, 2007
    
    
    277,500
    
    
    
    200,000
    
    
    
    477,500Granted
    
    
    2,500
    
    
    
    4,000
    
    
    
    6,500Forfeited
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Outstanding at March 31, 2008
    
    
    277,500
    
    
    
    204,000
    
    
    
    481,500Granted
    
    
    
    
    
    
    4,000
    
    
    
    4,000Forfeited
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Outstanding at June 30, 2008
    
    
    275,000
    
    
    
    208,000
    
    
    
    483,000Granted
    
    
    7,500
    
    
    
    
    
    
    
    7,500Forfeited
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2008
    
    
    282,500
    
    
    
    208,000
    
    
    
    490,500Vested at September 30, 2008
    
    
    282,500
    
    
    
    159,883
    
    
    
    442,383
 (1)
    
    Includes restricted stock awards.  10. Subsequent events
    20




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  The following discussion should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this Quarterly Report. Certain statements contained in this filing
are forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including but not limited to statements related to plans for future acquisitions, our
business and investment strategy, market trends and projected capital expenditures. When used in
this report, the words expect, anticipate, intend, plan, believe, seek, estimate,
would, could, should, and similar expressions are generally intended to identify
forward-looking statements. You should not place undue reliance on these forward-looking
statements, which reflect our opinions only as of the date of this Quarterly Report. We assume no
obligation to update or supplement forward-looking statements that become untrue because of
subsequent events. Forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results expressed or implied by
such forward-looking statements. For further information about these and other factors that could
affect our future results, please see the Item 1A.  Risk Factors in our Annual Report on Form
10-K for the year ended December 31, 2007 as amended, and the Part II, Item IA. Risk Factors
below and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2008 and
June 30, 2008. 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
 Form 10-K
 Student Housing Leasing
   21




---



##### Table of Contents



Management Services
  Third-Party Development Consulting Services
   22




---



##### Table of Contents



Trends and Outlook
 Rents and Occupancy
   Student Housing Operating Costs
   23




---



##### Table of Contents



General and Administrative Costs
  Termination of Lease with Place Properties, Inc.
  Critical Accounting Policies
  Student Housing Leasing Revenue Recognition
    24




---



##### Table of Contents



Student Housing Food Service Revenue Recognition
  Other Leasing Revenue Recognition
  Revenue and Cost Recognition of Third-Party Development Consulting Services
   Student Housing Property Acquisitions and Dispositions
  Business Combinations
  25




---



##### Table of Contents



Accounting for the Impairment and Disposal of Long Lived Assets
 Repairs and Maintenance
  Long Lived Assets  Impairment
 .
 Recently Issued Accounting Pronouncements
   Accounting for Derivative Instruments and Hedging
Activities
  26




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##### Table of Contents



Goodwill and Other Intangible Assets.
 Earnings Per Share.
  27




---



##### Table of Contents



Results of Operations for the Nine Months Ended September 30, 2008 and 2007
  Nine Months Ended September 30, 2008
    
    
    Nine Months Ended September 30, 2007Student
    
    
    Development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    DevelopmentHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    77,829
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    77,829
    
    
    $
    62,381
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    62,381Student housing
food service
revenue
    
    
    1,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,804
    
    
    
    1,744
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,744Other leasing
revenue
    
    
    6,945
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,945
    
    
    
    10,377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,377Third-party
development
consulting
services
    
    
    
    
    
    
    6,224
    
    
    
    
    
    
    
    
    
    
    
    6,224
    
    
    
    
    
    
    
    3,354
    
    
    
    
    
    
    
    
    
    
    
    3,354Third-party
management
services
    
    
    
    
    
    
    
    
    
    
    2,677
    
    
    
    
    
    
    
    2,677
    
    
    
    
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    2,447Intersegment
revenues
    
    
    
    
    
    
    187
    
    
    
    3,169
    
    
    
    (3,356
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,545
    
    
    
    (2,545
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,192
    
    
    
    8,192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055Total revenues
    
    
    86,578
    
    
    
    6,411
    
    
    
    5,846
    
    
    
    4,836
    
    
    
    103,671
    
    
    
    74,502
    
    
    
    3,354
    
    
    
    4,992
    
    
    
    4,510
    
    
    
    87,358Operating expenses:Student housing
leasing operations
    
    
    43,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,064
    
    
    
    31,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,227Student housing
food service
operations
    
    
    1,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,728
    
    
    
    1,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,683General and
administrative
    
    
    3
    
    
    
    2,521
    
    
    
    5,476
    
    
    
    (277
    )
    
    
    7,723
    
    
    
    102
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    
    
    
    
    7,063Intersegment
expenses
    
    
    3,169
    
    
    
    
    
    
    
    
    
    
    
    (3,169
    )
    
    
    
    
    
    
    2,545
    
    
    
    
    
    
    
    
    
    
    
    (2,545
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,192
    
    
    
    8,192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,055
    
    
    
    7,055Total operating
expenses
    
    
    47,964
    
    
    
    2,521
    
    
    
    5,476
    
    
    
    4,746
    
    
    
    60,707
    
    
    
    35,557
    
    
    
    1,985
    
    
    
    4,976
    
    
    
    4,510
    
    
    
    47,028Net operating income
    
    
    38,614
    
    
    
    3,890
    
    
    
    370
    
    
    
    90
    
    
    
    42,964
    
    
    
    38,945
    
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    40,330Nonoperating
expenses(1)
    
    
    40,041
    
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    39,996
    
    
    
    43,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,803Income
(loss) before
equity in earnings
(losses) of
unconsolidated
entities, income
taxes, minority
interest and
discontinued
operations
    
    
    (1,427
    )
    
    
    3,935
    
    
    
    370
    
    
    
    90
    
    
    
    2,968
    
    
    
    (4,858
    )
    
    
    1,369
    
    
    
    16
    
    
    
    
    
    
    
    (3,473
    )Equity in earnings
(losses) of
unconsolidated
entities
    
    
    (221
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (223
    )
    
    
    (466
    )
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    (245
    )Income(loss) before
taxes, minority
interest and
discontinued
operations(2)
    
    $
    (1,648
    )
    
    $
    3,933
    
    
    $
    370
    
    
    $
    90
    
    
    $
    2,745
    
    
    $
    (5,324
    )
    
    $
    1,590
    
    
    $
    16
    
    
    $
    
    
    
    $
    (3,718
    )
 (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 (loss) before income taxes, minority interest and discontinued operations to
EDRs consolidated net loss before income taxes, minority interest and discontinued operations determined under generally accepted accounting principles
for the nine months ended September 30: 2008
    
    
    2007Net income (loss) before taxes, minority interest and discontinued operations for reportable segments
    
    $
    2,745
    
    
    $
    (3,718
    )Other unallocated corporate expenses
    
    
    (5,073
    )
    
    
    (5,221
    )Net loss before taxes, minority interest and discontinued operations
    
    $
    (2,328
    )
    
    $
    (8,939
    )
  28




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##### Table of Contents



Student housing leasing
  Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007 (9)
    
    
    DifferenceOccupancyPhysical (1)
    
    
    90.2
    %
    
    
    92.6
    %
    
    
    (2.4
    )%Economic (2)
    
    
    85.6
    %
    
    
    88.6
    %
    
    
    (3.0
    )%NARPAB (3)
    
    $
    340
    
    
    $
    348
    
    
    $
    (8
    )Other income per avail. bed (4)
    
    $
    21
    
    
    $
    25
    
    
    $
    (4
    )RevPAB (5)
    
    $
    361
    
    
    $
    373
    
    
    $
    (12
    )Operating expense per bed (6) (7)
    
    $
    198
    
    
    $
    187
    
    
    $
    11Operating margin (7)
    
    
    45.3
    %
    
    
    49.9
    %
    
    
    (4.6
    )%Design Beds (8)
    
    
    215,339
    
    
    
    167,139
    
    
    
    48,200
  Nine months
    
    
    Nine monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007 (9)
    
    
    DifferenceOccupancyPhysical (1)
    
    
    91.9
    %
    
    
    92.6
    %
    
    
    -0.7
    %Economic (2)
    
    
    87.4
    %
    
    
    88.6
    %
    
    
    -1.2
    %NarPAB (3)
    
    $
    355
    
    
    $
    349
    
    
    $
    6Other income per avail. bed (4)
    
    $
    24
    
    
    $
    25
    
    
    
    ($1
    )RevPAB (5)
    
    $
    379
    
    
    $
    374
    
    
    $
    5Operating expense per bed (6) (7)
    
    $
    199
    
    
    $
    187
    
    
    
    ($12
    )Operating margin (7)
    
    
    47.7
    %
    
    
    50.0
    %
    
    
    -2.3
    %Design Beds (8)
    
    
    167,131
    
    
    
    167,139
    
    
    
    (8
    )
 (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, or total 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 expenses excluding management fees and depreciation and
amortization divided by the sum of the design beds for each of the included months.(7)
    
    For the nine months ended September 30, 2008, approximately $2 per bed related to the loss on the sale
of land and the parking garage at University Towers (see Note 8 in the condensed consolidated financial
statements) is excluded. The loss of $512 is included in the statement of operations in the condensed
consolidated financial statements. (8)
    
    Represents the sum of the monthly design beds in the portfolio during the period. As of February 1,
2008, the design beds related to the Place Portfolio were included in the total for the nine months
ended September 30, 2008 due to the termination of the lease with Place (see Note 2 in the condensed
consolidated financial statements).(9)
    
    This information excludes property information related to Tharpe (discontinued operations).  29




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30




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##### Table of Contents



Development consulting services
  Recognized EarningsProject
    
    Beds
    
    
    Fee Type
    
    2008
    
    
    2007
    
    
    DifferenceSlippery Rock University  Phase I
    
    
    1,390
    
    
    Development fee
    
    $
    
    
    
    $
    46
    
    
    $
    (46
    )Indiana University of Pennsylvania 
Phase I
    
    
    734
    
    
    Development fee
    
    
    
    
    
    
    712
    
    
    
    (712
    )University of Michigan
    
    
    896
    
    
    Development fee
    
    
    245
    
    
    
    196
    
    
    
    49University of North Carolina  Greensboro
    
    
    600
    
    
    Construction oversight fee
    
    
    
    
    
    
    49
    
    
    
    (49
    )University of Alabama  Tuscaloosa
    
    
    631
    
    
    Development fee
    
    
    670
    
    
    
    978
    
    
    
    (308
    )Slippery Rock University  Phase II
    
    
    746
    
    
    Development fee
    
    
    1,015
    
    
    
    713
    
    
    
    302Indiana University of Pennsylvania
 Phase II
    
    
    1,102
    
    
    Development fee
    
    
    2,341
    
    
    
    660
    
    
    
    1,681Fontainebleu Renovation Project
    
    
    435
    
    
    Development fee
    
    
    101
    
    
    
    
    
    
    
    101West Chester  Phase I
    
    
    1,197
    
    
    Development fee
    
    
    1,182
    
    
    
    
    
    
    
    1,182Indiana University of Pennsylvania
 Phase III
    
    
    1,084
    
    
    Development fee
    
    
    599
    
    
    
    
    
    
    
    599Colorado State University  Pueblo
    
    
    253
    
    
    Development fee
    
    
    71
    
    
    
    
    
    
    
    71Southern Illinois University  Carbondale
    
    
    528
    
    
    Construction oversight fee
    
    
    187
    
    
    
    
    
    
    
    187Development consulting
services
    
    
    
    
    
    
    
    $
    6,411
    
    
    $
    3,354
    
    
    $
    3,057California University of
Pennsylvania  Phase V
    
    
    356
    
    
    Development fee
    
    
    (2
    )
    
    
    118
    
    
    
    (120
    )University of North Carolina 
Greensboro
    
    
    600
    
    
    Development fee
    
    
    
    
    
    
    112
    
    
    
    (112
    )University of Louisville  Phase III
    
    
    359
    
    
    Development fee
    
    
    
    
    
    
    (9
    )
    
    
    9Equity in earnings of
unconsolidated entities
    
    
    
    
    
    
    
    $
    (2
    )
    
    $
    221
    
    
    $
    (223
    )
  31




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##### Table of Contents



Management services
    Unallocated corporate expenses
   32




---



##### Table of Contents



Results of Operations for the Three Months Ended September 30, 2008 and 2007
  Three Months Ended September 30, 2008
    
    
    Three Months Ended September 30, 2007Student
    
    
    Development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    DevelopmentHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalRevenues:Student housing
leasing revenue
    
    $
    24,671
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    24,671
    
    
    $
    19,378
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    19,378Student housing
food service
revenue
    
    
    608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642Other leasing
revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,509
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,509Third-party
development
consulting
services
    
    
    
    
    
    
    3,216
    
    
    
    
    
    
    
    
    
    
    
    3,216
    
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    
    
    
    
    1,287Third-party
management
services
    
    
    
    
    
    
    
    
    
    
    870
    
    
    
    
    
    
    
    870
    
    
    
    
    
    
    
    
    
    
    
    844
    
    
    
    
    
    
    
    844Intersegment
revenues
    
    
    
    
    
    
    187
    
    
    
    1,080
    
    
    
    (1,267
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    851
    
    
    
    (851
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,052
    
    
    
    3,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672Total revenues
    
    
    25,279
    
    
    
    3,403
    
    
    
    1,950
    
    
    
    1,785
    
    
    
    32,417
    
    
    
    23,529
    
    
    
    1,287
    
    
    
    1,695
    
    
    
    1,821
    
    
    
    28,332Operating expenses:Student housing
leasing operations
    
    
    17,833
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,833
    
    
    
    12,803
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,803Student housing
food service
operations
    
    
    600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600
    
    
    
    611
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    611General and
administrative
    
    
    
    
    
    
    866
    
    
    
    1,897
    
    
    
    (76
    )
    
    
    2,687
    
    
    
    16
    
    
    
    714
    
    
    
    1,629
    
    
    
    
    
    
    
    2,359Intersegment
expenses
    
    
    1,080
    
    
    
    
    
    
    
    
    
    
    
    (1,080
    )
    
    
    
    
    
    
    851
    
    
    
    
    
    
    
    
    
    
    
    (851
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,052
    
    
    
    3,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    2,672Total operating
expenses
    
    
    19,513
    
    
    
    866
    
    
    
    1,897
    
    
    
    1,896
    
    
    
    24,172
    
    
    
    14,281
    
    
    
    714
    
    
    
    1,629
    
    
    
    1,821
    
    
    
    18,445Net operating income
    
    
    5,766
    
    
    
    2,537
    
    
    
    53
    
    
    
    (111
    )
    
    
    8,245
    
    
    
    9,248
    
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    9,887Nonoperating
expenses(1)
    
    
    13,143
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    13,139
    
    
    
    14,041
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,041Income
(loss) before
equity in earnings
(losses) of
unconsolidated
entities, income
taxes, minority
interest and
discontinued
operations
    
    
    (7,377
    )
    
    
    2,541
    
    
    
    53
    
    
    
    (111
    )
    
    
    (4,894
    )
    
    
    (4,793
    )
    
    
    573
    
    
    
    66
    
    
    
    
    
    
    
    (4,154
    )Equity in earnings
(losses) of
unconsolidated
entities
    
    
    (195
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (196
    )
    
    
    (261
    )
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (247
    )Income
(loss) before
taxes, minority
interest and
discontinued
operations(2)
    
    $
    (7,572
    )
    
    $
    2,540
    
    
    $
    53
    
    
    $
    (111
    )
    
    $
    (5,090
    )
    
    $
    (5,054
    )
    
    $
    587
    
    
    $
    66
    
    
    $
    
    
    
    $
    (4,401
    )
 (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 (loss) before income taxes, minority interest and discontinued operations to
EDRs consolidated net loss before income taxes, minority interest and discontinued operations determined under generally accepted accounting principles
for the three months ended September 30: 2008
    
    
    2007Net loss before taxes, minority interest and discontinued operations for reportable segments
    
    $
    (5,090
    )
    
    $
    (4,401
    )Other unallocated corporate expenses
    
    
    (1,789
    )
    
    
    (1,776
    )Net loss before taxes, minority interest and discontinued operations
    
    $
    (6,879
    )
    
    $
    (6,177
    )
  33




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##### Table of Contents



Student housing leasing
  Three months
    
    
    Three monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    DifferenceOccupancyPhysical (1)
    
    
    89.0
    %
    
    
    92.3
    %
    
    
    (3.3
    )%Economic (2)
    
    
    76.8
    %
    
    
    81.0
    %
    
    
    (4.2
    )%NARPAB (3)
    
    $
    309
    
    
    $
    323
    
    
    $
    (14
    )Other income per avail. bed (4)
    
    $
    22
    
    
    $
    25
    
    
    $
    (3
    )RevPAB (5)
    
    $
    331
    
    
    $
    348
    
    
    $
    (17
    )Operating expense per bed (6)
    
    $
    240
    
    
    $
    230
    
    
    $
    10Operating margin
    
    
    27.7
    %
    
    
    33.9
    %
    
    
    (6.2
    )%Design Beds (7)
    
    
    74,445
    
    
    
    55,713
    
    
    
    18,732
  Three months
    
    
    Three monthsended
    
    
    endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    DifferenceOccupancyPhysical (1)
    
    
    91.0
    %
    
    
    92.3
    %
    
    
    -1.3
    %Economic (2)
    
    
    78.2
    %
    
    
    81.0
    %
    
    
    -2.8
    %NarPAB (3)
    
    $
    323
    
    
    $
    323
    
    
    $
    0Other income per avail. bed (4)
    
    $
    26
    
    
    $
    25
    
    
    $
    1RevPAB (5)
    
    $
    349
    
    
    $
    348
    
    
    $
    1Operating expense per bed (6)
    
    $
    241
    
    
    $
    230
    
    
    
    ($11
    )Operating margin
    
    
    30.8
    %
    
    
    34.0
    %
    
    
    -3.2
    %Design Beds (7)
    
    
    55,707
    
    
    
    55,713
    
    
    
    (6
    )
 (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, or total 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 expenses 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. As of February 1,
2008, the design beds related to the Place Portfolio were included in the total for the three months
ended September 30, 2008 due to the termination of the lease with Place Properties (see Note 2 in the
condensed consolidated financial statements).    34




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##### Table of Contents



Development consulting services
   35




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##### Table of Contents



Management services
   Unallocated corporate expenses
  Funds from Operations (FFO)
   36




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (7,259
    )
    
    $
    (5,802
    )
    
    $
    (3,052
    )
    
    $
    (6,099
    )Less gain on sale of student housing
property, net of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,579
    )Plus loss on sale of student housing assets
    
    
    
    
    
    
    
    
    
    
    512
    
    
    
    Plus student housing property depreciation
and amortization of lease intangibles
    
    
    6,952
    
    
    
    7,824
    
    
    
    21,497
    
    
    
    23,633Plus equity portion of real estate
depreciation and amortization on equity
investees
    
    
    123
    
    
    
    149
    
    
    
    371
    
    
    
    340Plus depreciation and amortization of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    711Plus minority interest
    
    
    (329
    )
    
    
    (337
    )
    
    
    (158
    )
    
    
    (306
    )Funds from operations
    
    $
    (513
    )
    
    $
    1,834
    
    
    $
    19,170
    
    
    $
    16,700
 Liquidity and Capital Resources
 Revolving credit facility and other indebtedness
      37




---



##### Table of Contents



Liquidity outlook and capital requirements
    38




---



##### Table of Contents



Predevelopment expenditures
   Long-term liquidity requirements
   39




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##### Table of Contents



Commitments and Contractual obligations
  Payment due by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    More than1 Year
    
    
    Years
    
    
    Years
    
    

5
Years
    
    
    TotalCommitments and Contractual
Obligations:Long-Term Debt Obligations(1)
    
    $
    883
    
    
    $
    285,997
    
    
    $
    75,052
    
    
    $
    65,775
    
    
    $
    427,707Contractual Interest Obligations(2)
    
    
    6,380
    
    
    
    27,956
    
    
    
    13,453
    
    
    
    3,701
    
    
    
    51,490Operating Lease and Future
Purchase Obligations (3)
    
    
    1,169
    
    
    
    4,419
    
    
    
    2,564
    
    
    
    461
    
    
    
    8,613Capital Reserve Obligations(4)
    
    
    1,404
    
    
    
    2,395
    
    
    
    421
    
    
    
    182
    
    
    
    4,402Total
    
    $
    9,836
    
    
    $
    320,767
    
    
    $
    91,490
    
    
    $
    70,119
    
    
    $
    492,212
 (1)
    
    Includes required monthly principal amortization and amounts due at maturity on first mortgage debt secured by student
housing properties. The first mortgage debt does not include $1,306 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
   40




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Inflation
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
      41




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Item 4. Controls and Procedures.
 Managements Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1.
Legal Proceedings.
  
 Item 1A.
Risk Factors.
   42




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Current market conditions could affect our ability to refinance existing indebtedness or obtain
additional financing on acceptable terms and may have other adverse effects on us.
     Our ownership of properties
through ground leases exposes us to the loss of such properties upon breach or
terraination of the ground leases.
   43




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Issuer Purchases of Equity Securities
  MaximumNumber (orApproximateDollar Value) ofTotal Number of
    
    
    Shares that MayShares Purchased as
    
    
    Yet BePart of Publicly
    
    
    PurchasedTotal Number
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    Under the PlansPeriod
    
    of Shares(1)
    
    
    per Share
    
    
    Programs
    
    
    or ProgramsJuly 1-31, 2008
    
    
    470
    
    
    $
    11.97
    
    
    
    
    
    
    
    August 1-31, 2008
    
    
    1,222
    
    
    
    11.12
    
    
    
    
    
    
    
    September 1-30, 2008
    
    
    396
    
    
    
    11.01
    
    
    
    
    
    
    
    Total
    
    
    2,088
    
    
    $
    11.40
    
    
    
    
    
    
    
    
 
 (1)
    
    All shares purchased in the open market pursuant to the terms of our Dividend Reinvestment
Plan. 
 Item 3. Defaults upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
   
    
    The New Employment Agreements revise the definition of Cause such that Cause means: the
executive has (1) continually failed to substantially perform, or been grossly negligent in
the discharge of, his duties to the Trust (in any case, other than by reason of a disability,
physical or mental illness or analogous condition), (2) been convicted of or pled nolo
contendere to a felony or a misdemeanor with respect to which fraud or dishonesty is a
material element, or (3) materially breached any material Trust policy or agreement with the
Trust.
 
    
    The New Employment Agreements revise the definition of Change of Control to include
additional events, including (1) certain changes in the composition of the directors serving
on the Board, (2) consummation of a merger or consolidation of the Trust or any direct or
indirect subsidiary thereof in which the Trusts securities represent less than 50% of the
combined voting power of the surviving entity after such merger or consolidation, (3)
stockholder approval of a plan of complete liquidation or winding-up of the Trust, or (4) any
transaction or series of transactions that the Board deems to constitute a change of control
of the Trust.
  44




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
    
    The New Employment Agreements revise the definition of Good Reason to include (1) an
adverse diminution in the executives title, duties or responsibilities, (2) a reduction of
10% or more in the executives annual base salary or target bonus opportunity, or (3) the
relocation of executives principal place of employment to another location more than 50 miles
from executives then current principal place of employment. In addition, the executive must
notify the Trust within ninety (90) days following the
occurrence of the event constituting Good Reason and the Trust will then have an opportunity
remedy such act or omission within thirty (30) days following its receipt of such notice.
 
    
    The New Employment Agreements clarify certain post-termination obligations of the Trust,
including (1) payment by the Trust of any earned but unpaid bonus in the event the agreement
is not renewed and (2) no severance payment in the event the employment is terminated for
death or disability.
 
    
    The New Employment Agreements clarify that payment of an executives litigation defense
costs does not limit any rights and/or obligations arising under any indemnification agreement
or the Trusts organizational documents.
 
    
    The New Employment Agreements revise certain provisions to make them compliant with the
requirements of, and final regulations promulgated under, Section 409A of the Internal Revenue
Code of 1986, as amended.
    
 Item 6. Exhibits.
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SIGNATURES
  EDUCATION REALTY TRUST, INC.Date: November 4, 2008
    By:
    /s/ Paul O. BowerPaul O. BowerPresident, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)Date: November 4, 2008
    By:
    /s/ Randall H. BrownRandall H. BrownExecutive Vice President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial Officer)Date: November 4, 2008
    By:
    /s/ J. Drew KoesterJ. Drew KoesterVice President, Assistant Secretary and Chief
Accounting Officer
(Principal Accounting Officer)  46




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EXHIBIT INDEX
 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
    
    
    Bylaws of Education Realty Trust, Inc. (Incorporated by reference
to Exhibit 3.2 to the Trust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 Trusts
Amendment No. 5 to its Registration Statement on Form S-11 (File
No. 333-119264), 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 Trusts
Registration Statement on Form S-11 (File No. 333-119264), filed
on September 24, 2004.)10.1
    
    
    Amended and Restated Executive Employment Agreement between
Education Realty Trust, Inc. and Paul O. Bower effective October
29, 2008.10.2
    
    
    Amended and Restated Executive Employment Agreement between
Education Realty Trust, Inc. and Randall H. Brown effective
October 29, 2008.10.3
    
    
    Amended and Restated Executive Employment Agreement between
Education Realty Trust, Inc. and Craig L. Cardwell effective
October 29, 2008.10.4
    
    
    Amended and Restated Executive Employment Agreement between
Education Realty Trust, Inc. and Thomas Trubiana effective October
29, 2008.10.5
    
    
    Amended and Restated Executive Employment Agreement between
Education Realty Trust, Inc. and Thomas J. Hickey effective
October 29, 2008.10.6
    
    
    Amended and Restated Executive Employment Agreement between
Education Realty Trust, Inc. and William W. Harris effective
October 29, 2008.10.7
    
    
    Executive Employment Agreement between Education Realty Trust,
Inc. and J. Drew Koester effective October 29, 2008.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act, as amended.31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act, as amended.32.1
    *
    
    Section 906 Certification of Chief Executive Officer.32.2
    *
    
    Section 906 Certification of Chief Financial Officer.
 
    
    Management Contract.*
    
    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.  47