##### 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 March 31, 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 MARCH 31, 2007
TABLE OF CONTENTS
 PART IFINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets of Education Realty Trust, Inc. and Subsidiaries as of
March 31, 2007 and December 31, 2006Condensed Consolidated Statements of Operations of Education Realty Trust, Inc. and
Subsidiaries for the three months ended March 31, 2007 and 2006Condensed Consolidated Statements of Cash Flows of Education Realty Trust, Inc. and
Subsidiaries for the three months ended March 31, 2007 and 2006Notes to Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSignaturesEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO




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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
 March 31, 2007
    
    
    December 31, 2006(Unaudited)AssetsStudent housing properties, net
    
    $
    797,216
    
    
    $
    804,759Corporate office furniture, net
    
    
    751
    
    
    
    752Cash and cash equivalents
    
    
    7,580
    
    
    
    6,427Restricted cash
    
    
    8,631
    
    
    
    9,154Student contracts receivable, net
    
    
    245
    
    
    
    227Receivable from affiliate
    
    
    400
    
    
    
    369Management fee receivable from third party
    
    
    708
    
    
    
    669Goodwill and other intangibles, net
    
    
    3,605
    
    
    
    3,649Other assets
    
    
    12,460
    
    
    
    9,452Total assets
    
    $
    831,596
    
    
    $
    835,458Liabilities and stockholders equityLiabilities:Mortgage loans, net of unamortized premium/discount
    
    $
    423,721
    
    
    $
    423,933Other long term debt
    
    
    41,500
    
    
    
    47,000Revolving line of credit
    
    
    20,800
    
    
    
    22,400Accounts payable and accrued expenses
    
    
    9,271
    
    
    
    10,764Deferred revenue
    
    
    8,772
    
    
    
    9,073Total liabilities
    
    
    504,064
    
    
    
    513,170Minority interest
    
    
    19,160
    
    
    
    19,289Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Common stock, $.01 par value, 200,000,000 shares
authorized, 27,601,761 and 26,810,552 shares
issued and outstanding as of March 31, 2007 and
December 31, 2006, respectively
    
    
    276
    
    
    
    268Preferred shares, $0.01 par value, 50,000,000
shares authorized, no shares issued and
outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    336,605
    
    
    
    330,374Warrants
    
    
    
    
    
    
    375Accumulated deficit
    
    
    (28,509
    )
    
    
    (28,018
    )Total stockholders equity
    
    
    308,372
    
    
    
    302,999Total liabilities and stockholders equity
    
    $
    831,596
    
    
    $
    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
 Three months ended
    
    
    Three months endedMarch 31,
    
    
    March 31,2007
    
    
    2006Revenues:Student housing leasing revenue
    
    $
    23,495
    
    
    $
    22,534Student housing food service revenue
    
    
    580
    
    
    
    968Other leasing revenue
    
    
    3,434
    
    
    
    3,434Third-party development services
    
    
    1,043
    
    
    
    555Third-party management services
    
    
    882
    
    
    
    699Operating expense reimbursements
    
    
    2,156
    
    
    
    1,795Total revenues
    
    
    31,590
    
    
    
    29,985Operating expenses:Student housing leasing operations
    
    
    9,651
    
    
    
    9,289Student housing food service operations
    
    
    561
    
    
    
    859General and administrative
    
    
    3,490
    
    
    
    2,980Depreciation and amortization
    
    
    8,549
    
    
    
    9,153Reimbursable operating expenses
    
    
    2,156
    
    
    
    1,795Total operating expenses
    
    
    24,407
    
    
    
    24,076Operating income
    
    
    7,183
    
    
    
    5,909Nonoperating expenses:Interest expense
    
    
    7,387
    
    
    
    6,870Amortization of deferred financing costs
    
    
    280
    
    
    
    274Interest income
    
    
    (84
    )
    
    
    (209
    )Total nonoperating expenses
    
    
    7,583
    
    
    
    6,935Loss before equity in earnings of unconsolidated entities,
income taxes and minority interest
    
    
    (400
    )
    
    
    (1,026
    )Equity in earnings of unconsolidated entities
    
    
    43
    
    
    
    283Loss before income taxes and minority interest
    
    
    (357
    )
    
    
    (743
    )Income tax benefit
    
    
    (2
    )
    
    
    (104
    )Net loss before minority interest
    
    
    (355
    )
    
    
    (639
    )Minority interest
    
    
    136
    
    
    
    141Net loss
    
    $
    (491
    )
    
    $
    (780
    )Earnings per share information:Loss per share  basic and diluted
    
    $
    (0.02
    )
    
    $
    (0.03
    )Weighted average common shares outstanding- basic and diluted
    
    
    27,173,475
    
    
    
    26,268,389Distributions per common share
    
    $
    0.2050
    
    
    $
    0.2975
 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 CASH FLOWS
 Three months
    
    
    Three monthsended
    
    
    endedMarch 31,
    
    
    March 31,2007
    
    
    2006Operating activities:Net loss
    
    $
    (491
    )
    
    $
    (780
    )Adjustments to reconcile net loss to net cash provided by operating
activities:Depreciation and amortization
    
    
    8,549
    
    
    
    9,153Deferred taxes
    
    
    (49
    )
    
    
    149Loss on disposal of assets
    
    
    
    
    
    
    12Gain on extinguishment of debt
    
    
    (36
    )
    
    
    Amortization of deferred financing costs
    
    
    280
    
    
    
    274Amortization of unamortized debt premiums/discounts
    
    
    (54
    )
    
    
    (121
    )Distributions from unconsolidated entities
    
    
    103
    
    
    
    Noncash compensation expense related to PIUs and restricted
stock
    
    
    243
    
    
    
    320Equity in earnings of unconsolidated entities
    
    
    (43
    )
    
    
    (283
    )Minority interest
    
    
    136
    
    
    
    141Change in operating assets and liabilities (net of acquisitions)
    
    
    (4,842
    )
    
    
    (3,995
    )Net cash provided by operating activities
    
    
    3,796
    
    
    
    4,870Investing activities:Property acquisitions, net of cash acquired
    
    
    
    
    
    
    (100,384
    )Purchase of corporate furniture and fixtures
    
    
    (72
    )
    
    
    (18
    )Restricted cash
    
    
    523
    
    
    
    (890
    )Investment in student housing properties
    
    
    (890
    )
    
    
    (612
    )Investment in joint ventures
    
    
    (30
    )
    
    
    Net cash used in investing activities
    
    
    (469
    )
    
    
    (101,904
    )Financing activities:Payment of mortgage notes
    
    
    (30,906
    )
    
    
    (403
    )Payment of other long-term debt
    
    
    (5,500
    )
    
    
    Borrowings of mortgage notes
    
    
    30,800
    
    
    
    Borrowings of other long-term debt
    
    
    
    
    
    
    50,000Borrowing (repayment) of line of credit, net
    
    
    (1,600
    )
    
    
    Debt issuance costs
    
    
    (324
    )
    
    
    (1,302
    )Proceeds from issuance of common stock
    
    
    11,247
    
    
    
    Payment of stock issuance costs
    
    
    (30
    )
    
    
    (110
    )Dividends and distributions paid
    
    
    (5,861
    )
    
    
    (8,502
    )Net cash provided by (used in) financing activities
    
    
    (2,174
    )
    
    
    39,683Net increase (decrease) in cash and cash equivalents
    
    
    1,153
    
    
    
    (57,351
    )Cash and cash equivalents, beginning of period
    
    
    6,427
    
    
    
    61,662Cash and cash equivalents, end of period
    
    $
    7,580
    
    
    $
    4,311Supplemental disclosure of cash flow information:Interest paid
    
    $
    6,976
    
    
    $
    6,438Income taxes paid
    
    $
    148
    
    
    $
    310Supplemental disclosure of noncash activities:Prepaid acquisition costs
    
    $
    
    
    
    $
    4,718Units issued in connection with acquisitions
    
    
    
    
    
    
    500Warrants expired
    
    
    375
    
    
    
    Debt assumed in property acquisitions
    
    
    
    
    
    
    98,660
 See accompanying notes to the condensed consolidated financial statements.




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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




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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.
 Repairs, maintenance, and major improvements
  Investment in unconsolidated joint ventures, limited liability companies, and limited partnerships




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##### Table of Contents



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)
    
    
    102,111Profits Interest Units
    
    
    270,000Total potentially dilutive securities
    
    
    1,555,606
  Goodwill and other intangible assets
 Goodwill
and Other Intangible Assets
 Minority interests
  Revenue recognition




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##### Table of Contents



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 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
  
    
    Salisbury Student Apartment Developers Joint Venture, 33% owned by AOES




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##### Table of Contents




    
    Salisbury Student Apartment Developers LLC, a Maryland limited liability company, 33% owned by AOES
    
    University of Louisville Apartment Developers LLC, a Kentucky limited liability company, 50% owned by AOES
    
    Hines/AOES LLC, an Alabama limited liability company, 50% owned by AOES
    
    National Development/Allen & OHara CUPA, LLC, a Pennsylvania limited liability company, 50% owned by Allen &
OHara Development Company, LLC (AODC)
    
    National Development/Allen & OHara Lock Haven, LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    National Development/Allen & OHara Clarion, LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    Allen & OHara National Development Bloomsburg LLC, a Pennsylvania limited liability company, 50% owned by AODC
    
    Allen & OHara / Academic Privatization LLC, a Tennessee limited liability company, 50% owned by AODC
    
    University Village-Greensboro LLC, a Delaware limited liability company, 25% owned by EROP
    
    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 EROP
    
    APF EDR, LP, a Delaware limited partnership, 10% owned by EROP
    
    APF EDR Food Services, LP, a Delaware limited partnership, 10% owned by EROP
    
    WEDR Stinson Investors V, LLC, a Delaware limited liability company, 10% owned by EROP
  2007
    
    2006Results of Operations:Revenues
    
    $
    3,478
    
    
    $
    601Net income (loss)
    
    
    (644
    )
    
    
    566Equity in earnings of unconsolidated entities
    
    $
    43
    
    
    $
    283
  4. Debt
 Notes payable and revolving credit facility




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##### Table of Contents



Mortgage debt
  Fiscal Year Ending2007 (9 months ended December 31, 2007)
    
    $
    29,2522008
    
    
    26,4812009
    
    
    285,0492010
    
    
    8882011
    
    
    947Thereafter
    
    
    78,902Total
    
    
    421,519Unamortized debt premium/discounts
    
    
    2,202Outstanding at March 31, 2007, net of unamortized premiums/discounts
    
    $
    423,721
  5. Segments
  Three months ended March 31, 2007
    
    
    Three months ended March 31, 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
    
    $
    23,495
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23,495
    
    
    $
    22,534
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    22,534Student housing
food service
revenue
    
    
    580
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    580
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    968Other leasing
revenue
    
    
    3,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,434
    
    
    
    3,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,434Third-party
development
consulting services
    
    
    
    
    
    
    1,043
    
    
    
    
    
    
    
    
    
    
    
    1,043
    
    
    
    
    
    
    
    555
    
    
    
    
    
    
    
    
    
    
    
    555




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##### Table of Contents



Three months ended March 31, 2007
    
    
    Three months ended March 31, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalThird-party
management revenue
    
    
    
    
    
    
    
    
    
    
    882
    
    
    
    
    
    
    
    882
    
    
    
    
    
    
    
    
    
    
    
    699
    
    
    
    
    
    
    
    699Intersegment
revenues
    
    
    
    
    
    
    
    
    
    
    937
    
    
    
    (937
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    918
    
    
    
    (918
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,156
    
    
    
    2,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,795
    
    
    
    1,795Total revenues
    
    
    27,509
    
    
    
    1,043
    
    
    
    1,819
    
    
    
    1,219
    
    
    
    31,590
    
    
    
    26,936
    
    
    
    555
    
    
    
    1,617
    
    
    
    877
    
    
    
    29,985Operating
Expenses:Student housing
leasing operations
    
    
    9,651
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,651
    
    
    
    9,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,289Student housing
food service
operations
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561
    
    
    
    859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    859General and
administrative
    
    
    43
    
    
    
    674
    
    
    
    1,879
    
    
    
    
    
    
    
    2,596
    
    
    
    
    
    
    
    514
    
    
    
    1,294
    
    
    
    
    
    
    
    1,808Intersegment
expenses
    
    
    937
    
    
    
    
    
    
    
    
    
    
    
    (937
    )
    
    
    
    
    
    
    918
    
    
    
    
    
    
    
    
    
    
    
    (918
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,156
    
    
    
    2,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,795
    
    
    
    1,795Total
operating expenses
    
    
    11,192
    
    
    
    674
    
    
    
    1,879
    
    
    
    1,219
    
    
    
    14,964
    
    
    
    11,066
    
    
    
    514
    
    
    
    1,294
    
    
    
    877
    
    
    
    13,751Net operating
income (loss)
    
    
    16,317
    
    
    
    369
    
    
    
    (60
    )
    
    
    
    
    
    
    16,626
    
    
    
    15,870
    
    
    
    41
    
    
    
    323
    
    
    
    
    
    
    
    16,234Nonoperating
expenses (1)
    
    
    15,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,630
    
    
    
    15,971
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,971Income (loss)
before equity in
earnings of
unconsolidated
entities, income
taxes and minority
interest
    
    
    687
    
    
    
    369
    
    
    
    (60
    )
    
    
    
    
    
    
    996
    
    
    
    (101
    )
    
    
    41
    
    
    
    323
    
    
    
    
    
    
    
    263Equity in earnings
of unconsolidated
entities
    
    
    (97
    )
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    283Income (loss)
before taxes and
minority
interest (3)
    
    $
    590
    
    
    $
    509
    
    
    $
    (60
    )
    
    $
    
    
    
    $
    1,039
    
    
    $
    (101
    )
    
    $
    324
    
    
    $
    323
    
    
    $
    
    
    
    $
    546Total segment
assets
    
    $
    811,424
    
    
    $
    3,645
    
    
    $
    5,774
    
    
    $
    
    
    
    $
    820,843
    
    
    $
    829,539
    
    
    $
    970
    
    
    $
    5,340
    
    
    $
    
    
    
    $
    835,849
 
 (1)
    
    Nonoperating expenses include interest expense, interest income, amortization of deferred financing costs, depreciation, and amortization of intangibles.(2)
    
    Certain prior period amounts have been reclassified to
conform to the current period presentation.  Interest expense of $750
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 March 31, 2006.
Additionally, non cash compensation expense of $236 has been
reclassified from an unallocated expense to the applicable segment.(3)
    
    The following is a reconciliation of the reportable segments net income before income taxes and minority interest to the Trusts consolidated net loss
before income taxes and minority interest: 2007
    
    
    2006Net income before income taxes and minority interest for reportable segments
    
    $
    1,039
    
    
    $
    546Unallocated
corporate expenses (2)
    
    
    (1,396
    )
    
    
    (1,289
    )Net loss before income taxes and minority interest
    
    $
    (357
    )
    
    $
    (743
    )




---



##### Table of Contents



6. Commitments and contingencies
       7. Acquisition and disposition of real estate investments
   8. Incentive plan




---



##### 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
    
    
    
    466,000Vested at March 31, 2007
    
    
    270,000
    
    
    
    93,889
    
    
    
    363,889
 9. Subsequent events
    
 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




---



##### Table of Contents



Our Business Segments
  Student Housing Leasing
      Third-Party Management Services
  Third-Party Development Consulting Services




---



##### Table of Contents



Trends and Outlook
 Rents and Occupancy
   General and Administrative Costs
  Critical Accounting Policies
  Student Housing Leasing Revenue Recognition




---



##### Table of Contents



Student Housing Food Service Revenue Recognition
  Other Leasing Revenue Recognition
  Revenue and Cost Recognition of Third-Party Development Consulting Services
   Student Housing Property Acquisitions
  Business Combinations
 Repairs and Maintenance
  Long Lived Assets  Impairment
 Accounting for the Impairment and
Disposal of Long Lived Assets




---



##### Table of Contents



Recently Issued Accounting Pronouncements
 Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities"
 Results of Operations for the Three Months Ended March 31, 2007 and 2006
  Three months ended March 31, 2007
    
    
    Three months ended March 31, 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
    
    $
    23,495
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23,495
    
    
    $
    22,534
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    22,534Student housing
food service
revenue
    
    
    580
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    580
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    968Other leasing
revenue
    
    
    3,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,434
    
    
    
    3,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,434Third-party
development
consulting services
    
    
    
    
    
    
    1,043
    
    
    
    
    
    
    
    
    
    
    
    1,043
    
    
    
    
    
    
    
    555
    
    
    
    
    
    
    
    
    
    
    
    555Third-party
management revenue
    
    
    
    
    
    
    
    
    
    
    882
    
    
    
    
    
    
    
    882
    
    
    
    
    
    
    
    
    
    
    
    699
    
    
    
    
    
    
    
    699Intersegment
revenues
    
    
    
    
    
    
    
    
    
    
    937
    
    
    
    (937
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    918
    
    
    
    (918
    )
    
    
    Operating expense
reimbursements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,156
    
    
    
    2,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,795
    
    
    
    1,795Total revenues
    
    
    27,509
    
    
    
    1,043
    
    
    
    1,819
    
    
    
    1,219
    
    
    
    31,590
    
    
    
    26,936
    
    
    
    555
    
    
    
    1,617
    
    
    
    877
    
    
    
    29,985Operating
Expenses:Student housing
leasing operations
    
    
    9,651
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,651
    
    
    
    9,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,289Student housing
food service
operations
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561
    
    
    
    859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    859




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##### Table of Contents



Three months ended March 31, 2007
    
    
    Three months ended March 31, 2006Third-Party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Third-PartyStudent
    
    
    Development
    
    
    Third-Party
    
    
    
    
    
    
    
    
    
    
    Student
    
    
    Development
    
    
    Third-PartyHousing
    
    
    Consulting
    
    
    Management
    
    
    
    
    
    
    
    
    
    
    Housing
    
    
    Consulting
    
    
    ManagementLeasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    Total
    
    
    Leasing
    
    
    Services
    
    
    Services
    
    
    Adjustments
    
    
    TotalGeneral and
administrative
    
    
    43
    
    
    
    674
    
    
    
    1,879
    
    
    
    
    
    
    
    2,596
    
    
    
    
    
    
    
    514
    
    
    
    1,294
    
    
    
    
    
    
    
    1,808Intersegment
expenses
    
    
    937
    
    
    
    
    
    
    
    
    
    
    
    (937
    )
    
    
    
    
    
    
    918
    
    
    
    
    
    
    
    
    
    
    
    (918
    )
    
    
    Reimbursable
operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,156
    
    
    
    2,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,795
    
    
    
    1,795Total
operating expenses
    
    
    11,192
    
    
    
    674
    
    
    
    1,879
    
    
    
    1,219
    
    
    
    14,964
    
    
    
    11,066
    
    
    
    514
    
    
    
    1,294
    
    
    
    877
    
    
    
    13,751Net operating
income (loss)
    
    
    16,317
    
    
    
    369
    
    
    
    (60
    )
    
    
    
    
    
    
    16,626
    
    
    
    15,870
    
    
    
    41
    
    
    
    323
    
    
    
    
    
    
    
    16,234Nonoperating
expenses (1)
    
    
    15,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,630
    
    
    
    15,971
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,971Income (loss)
before equity in
earnings of
unconsolidated
entities, income
taxes and minority
interest
    
    
    687
    
    
    
    369
    
    
    
    (60
    )
    
    
    
    
    
    
    996
    
    
    
    (101
    )
    
    
    41
    
    
    
    323
    
    
    
    
    
    
    
    263Equity in earnings
of unconsolidated
entities
    
    
    (97
    )
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    283Income (loss)
before taxes and
minority
interest (3)
    
    $
    590
    
    
    $
    509
    
    
    $
    (60
    )
    
    $
    
    
    
    $
    1,039
    
    
    $
    (101
    )
    
    $
    324
    
    
    $
    323
    
    
    $
    
    
    
    $
    546
 
 (1)
    
    Nonoperating expenses include interest expense, interest income, amortization of deferred financing costs, depreciation, and amortization of intangibles.(2)
    
    Certain prior period amounts have been reclassified to conform to the current period presentation. Interest expense of $750 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 March 31, 2006. Additionally, non cash compensation expense of $236 has been reclassified from an
unallocated corporate expense to the applicable segment.(3)
    
    The following is a reconciliation of the reportable segments net income before income taxes and minority interest to the Trusts consolidated net loss
before income taxes and minority interest determined under generally accepted accounting principles: 2007
    
    
    2006Net income before income taxes and minority interest for reportable segments
    
    $
    1,039
    
    
    $
    546Unallocated
corporate expenses (2)
    
    
    (1,396
    )
    
    
    (1,289
    )Net loss before income taxes and minority interest
    
    $
    (357
    )
    
    $
    (743
    )
 Student housing leasing
  Three months
    
    Three monthsended
    
    endedMarch 31,
    
    March 31,2007
    
    2006
    
    DifferenceOccupancyPhysical(1)
    
    
    95.2
    %
    
    
    94.6
    %
    
    
    0.6
    %Economic(2)
    
    
    95.5
    %
    
    
    95.1
    %
    
    
    0.4
    %NarPAB(3)
    
    $
    368
    
    
    $
    364
    
    
    $
    4Other income per avail. bed(4)
    
    $
    21
    
    
    $
    21
    
    
    $
    RevPAB(5)
    
    $
    389
    
    
    $
    385
    
    
    $
    4




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##### Table of Contents



Three months
    
    Three monthsended
    
    endedMarch 31,
    
    March 31,2007
    
    2006
    
    DifferenceOperating expense per bed(6)
    
    $
    160
    
    
    $
    159
    
    
    $
    1Operating margin
    
    
    58.9
    %
    
    
    58.8
    %
    
    
    0.1
    %Design Beds(7)
    
    
    60,375
    
    
    
    58,503
    
    
    
    1,872
 
 (1)
    
    Physical occupancy represents a weighted average of the month end occupancies for the respective period.(2)
    
    Economic occupancy represents the effective occupancy calculated by taking net apartment rent accounted for
on a GAAP basis for the respective period divided by market rent for the respective period.(3)
    
    NarPAB represents GAAP net apartment rent for the respective period divided by the sum of the design beds in
the portfolio for each of the included months. Does not include food service revenue or other leasing
revenue.(4)
    
    Represents 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
  Recognized EarningsProject
    
    Beds
    
    Fee Type
    
    2007
    
    2006
    
    DifferenceSlippery Rock University  Phase I
    
    
    1,390
    
    
    Development fee
    
    $
    37
    
    
    $
    477
    
    
    $
    (440
    )Indiana University of Pennsylvania
    
    
    734
    
    
    Development fee
    
    
    438
    
    
    
    
    
    
    
    438University of Michigan
    
    
    849
    
    
    Development fee
    
    
    80
    
    
    
    
    
    
    
    80University of North Carolina  Greensboro
    
    
    600
    
    
    Construction
oversight fee
    
    
    33
    
    
    
    
    
    
    
    33University of Louisville  Phase III
    
    
    359
    
    
    Construction
oversight fee
    
    
    
    
    
    
    35
    
    
    
    (35
    )University of Alabama  Birmingham
    
    
    753
    
    
    Construction
oversight fee
    
    
    
    
    
    
    43
    
    
    
    (43
    )University of Alabama  Tuscaloosa
    
    
    631
    
    
    Development fee
    
    
    435
    
    
    
    
    
    
    
    435Slippery Rock University  Phase II
    
    
    746
    
    
    Development fee
    
    
    20
    
    
    
    
    
    
    
    20Third-party development consulting services
    
    
    
    
    
    
    
    $
    1,043
    
    
    $
    555
    
    
    $
    488California University of Pennsylvania 
Phase IV
    
    
    447
    
    
    Development fee
    
    $
    
    
    
    $
    103
    
    
    $
    (103
    )California University of Pennsylvania  Phase V
    
    
    354
    
    
    Development fee
    
    
    63
    
    
    
    
    
    
    
    63




---



##### Table of Contents



Recognized EarningsProject
    
    Beds
    
    Fee Type
    
    2007
    
    2006
    
    DifferenceUniversity of North Carolina  Greensboro
    
    
    600
    
    
    Development fee
    
    
    77
    
    
    
    
    
    
    
    77University of Louisville  Phase III
    
    
    359
    
    
    Development fee
    
    
    
    
    
    
    83
    
    
    
    (83
    )University of Alabama  Birmingham
    
    
    753
    
    
    Development fee
    
    
    
    
    
    
    97
    
    
    
    (97
    )Equity in earnings of unconsolidated entities
    
    
    
    
    
    
    
    $
    140
    
    
    $
    283
    
    
    $
    (143
    )
    Third-party management services
   Nonoperating expenses
  Unallocated corporate expenses
  Funds from Operations




---



##### Table of Contents



Three Months EndedMarch 31,2007
    
    
    2006Net loss
    
    $
    (491
    )
    
    $
    (780
    )Plus student housing property
depreciation and amortization of
lease intangibles
    
    
    8,467
    
    
    
    9,069Plus equity portion of real estate
depreciation and amortization on
equity investees
    
    
    98Plus minority interest expense
    
    
    136
    
    
    
    141Funds from operations
    
    $
    8,210
    
    
    $
    8,430
 Liquidity and Capital Resources
 Revolving Credit Facility and Other Short Term Loans




---



##### Table of Contents



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




---



##### Table of Contents



Commitments and Contractual obligations
  Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(In thousands)Commitments and Contractual Obligations:Long-Term Debt Obligations (1)
    
    $
    29,252
    
    
    $
    373,830
    
    
    $
    1,835
    
    
    $
    78,902
    
    
    $
    483,819Contractual Interest Obligations (2)
    
    
    20,365
    
    
    
    41,920
    
    
    
    9,839
    
    
    
    2,734
    
    
    
    74,858Operating Lease and Future Purchase
Obligations (3)
    
    
    2,042
    
    
    
    4,282
    
    
    
    3,247
    
    
    
    908
    
    
    
    10,479Capital Reserve Obligations (4)
    
    
    1,573
    
    
    
    2,418
    
    
    
    421
    
    
    
    182
    
    
    
    4,594Total
    
    $
    53,232
    
    
    $
    422,450
    
    
    $
    15,342
    
    
    $
    82,726
    
    
    $
    573,750
 
 (1)
    
    Includes required monthly principal amortization and amounts due at maturity on first mortgage debt secured by student
housing properties and principal amortization on the Amended Revolver and the Term Loan. The first mortgage debt does not
include $2,202 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
  Inflation
  Recent Developments




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### 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.