Attached files
file | filename |
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8-K - Education Realty Trust, Inc. | v175219_8k.htm |
EX-99.2 - Education Realty Trust, Inc. | v175219_ex99-2.htm |
EDUCATION
REALTY TRUST ANNOUNCES
FOURTH
QUARTER 2009 RESULTS
MEMPHIS,
TN, February 23, 2010 - Education Realty Trust, Inc. (NYSE:EDR), a leader in the
ownership, development and management of student housing, today
announced operating results for the quarter and year ended December 31,
2009.
Highlights
|
·
|
Funds
from operations (FFO) and funds from operations adjusted (FFOA)
performance of $0.13 and $0.18 per share/unit, respectively, for the
fourth quarter 2009. FFOA, which excludes the impact of asset
impairment and financing charges was in line with EDR’s previous
guidance;
|
|
·
|
Same-community
net operating income decreased 3.5% for the fourth quarter as a result of
a 4.0% decline in revenue partially offset by 4.6% savings through cost
control measures;
|
|
·
|
Same-community
net operating income increased 1.8% for the year as a result of a 1.3%
decline in revenue offset by a 4.6% savings through cost control
measures. (Place-communities are not considered same-community
since 2008 results only include the eleven months subsequent to the
February 2008 lease termination.);
|
|
·
|
Raised
$116.1 million in net proceeds from a public offering of 28,175,000 shares
of common stock in July 2009 and reduced total debt by $51.2 million in
the quarter;
|
|
·
|
Debt
to gross asset value improved to 42.9%, and the Company’s trailing twelve
month interest coverage ratio was
2.0;
|
|
·
|
The
Company replaced its existing corporate revolving credit facility with a
three year, $95.0 million secured revolving credit
facility;
|
|
·
|
Randy
Churchey was hired as President and Chief Executive Officer in
January 2010;
|
|
·
|
The
Company has been engaged to develop and manage a high-rise apartment
community for graduate students at the Science and Technology Park at
Johns Hopkins; and
|
|
·
|
Howard
Silver was elected to the Board of Directors in February
2010.
|
Randy
Churchey, Education Realty Trust’s President and Chief Executive Officer stated,
“2009 was a year marked by change and progress for the Company. While leasing
results were challenged during these unprecedented economic times, our
same-community average occupancy was 88%. Same-community net operating income
increased 1.8% during the year as the cost control initiatives we put in place
took hold and contributed to both a fourth quarter and full year expense
reduction of over 4%. We exited the year with a stronger balance sheet and
expect to further enhance our financial flexibility in the coming
quarters.”
“I have
been here less than 60 days,” Mr. Churchey continued, “and the potential
and the opportunities are exciting. We have already started making
progress; however it will take time to see results given the nature of the
annual leasing cycle in student-housing. Our Company and team are
highly-regarded within the student housing industry. As we navigate the
transition, I am confident that with our stronger capital structure, EDR will be
able to seize new opportunities and produce consistent earnings growth and
increased shareholder value.”
Net
Loss Attributable to Common Stockholders
Net loss
attributable to common stockholders for the fourth quarter of 2009 was $(0.5)
million, or $(0.01) per diluted share, compared to a net loss attributable to
common stockholders of $(4.9) million, or $(0.17) per diluted share, for the
same period in 2008.
For the
year ended December 31, 2009, the net loss attributable to common stockholders
was $(7.3) million, or $(0.18) per diluted share, compared to $(7.9) million, or
$(0.28) per diluted share, for the same period in 2008.
Funds
From Operations (“FFO”)
FFO for
the fourth quarter of 2009 was $0.13 per share/unit, or $7.3 million, compared
to $0.09 per share/unit, or $2.6 million, for the same period in
2008. FFO for the fourth quarter of 2009 and 2008 included $(0.05)
and $(0.22) per share/unit, respectively, related to losses for asset impairment
charges and the early extinguishment of debt.
FFO for
the year 2009, was $0.52 per share/unit, or $21.9 million, compared to $0.73 per
share/unit, or $21.8 million, for the same period in 2008. FFO for
the full year 2009 and 2008 included $(0.06) and $(0.23) per share/unit,
respectively, related to losses for asset impairment charges and the early
extinguishment of debt.
The
Company’s follow-on equity offering in July 2009 increased the year over year
weighted average shares/units by 94% for the fourth quarter and by 40% for the
full year.
A
reconciliation of FFO to net loss is included in the financial tables
accompanying this release.
Same-Community
Results
Same-community
net operating income declined 3.5%, or $0.6 million, for the fourth quarter of
2009 on a revenue decline of 4.0%, or $1.1 million, and operating expense
reductions of 4.6%, or $0.5 million. The same-community average
operating margin was 58.3%, consistent with the fourth quarter of
2008.
2
Legacy-Communities
Net
operating income for the Legacy-communities declined 5.4%, or $0.8 million, for
the fourth quarter of 2009 on a revenue decline of 5.1%, or $1.2 million, and an
operating expense reduction of 4.8%, or $0.4 million. The revenue
decline was mainly attributed to a 2.1% decline in rental rates, a 1.2% decline
in occupancy and a 1.5% drop due to a decline in other rental
income. The average operating margin for the Legacy-communities was
60.3%, consistent with the fourth quarter of 2008.
Place-Communities
Net
operating income for the Place-communities was up 6.2%, or $0.2 million, for the
fourth quarter of 2009 on revenue growth of 0.9% and operating expense
reductions of 4.0%, or $0.1 million. The revenue growth was driven by
a 3.0% improvement in occupancy that was offset by a 0.7% decline in rental
rates and a 1.4% decline due to a drop in other
rental income. As a result, operating margins improved 260
basis points and exceeded 50% for the first time since the acquisition of
this portfolio in 2006.
Community
Occupancy
The
fourth quarter 2009 average physical and economic occupancies for the
Legacy-communities were 92.5% and 93.1%, respectively, compared to 93.5% and
94.7% for the same quarter in 2008. The Place-communities had
physical and economic occupancies of 84.0% and 80.7%, respectively, compared to
81.3% and 79.0% in the fourth quarter of 2008. Physical occupancy is
the average of occupied rooms to available rooms at the end of each month,
whereas economic occupancy represents net apartment rent on a U.S. GAAP basis as
a percentage of potential rent and reflects the impact of straight-line
rent.
Capital
Structure
On
December 31, 2009, the Company had cash and cash equivalents totaling $31.2
million and no outstanding borrowings on its revolving credit facility, which
had a borrowing base availability of $41.2 million. In addition, the
Company has two communities unencumbered by debt and, although eligible for
inclusion, are currently excluded from the revolving credit
facility. If these communities were included, the Company estimates
that the borrowing base availability would increase by approximately $9.0
million. The Company’s debt to gross asset value was reduced to 42.9%
from 53.1%, and its interest coverage ratio was 2.0. Interest
rates on all indebtedness is either fixed or capped. The Company has
two project based construction loans with a combined December 31, 2009 balance
of $28.9 million that reach initial maturity within the next eighteen
months. Upon initial maturity, the Company expects to exercise the
option to extend these loans and based on current forecasts, believes the
principal balance will be reduced by approximately $6.0 million.
3
Earnings
Guidance and Outlook
Based
upon the Company’s current estimates, FFO per share/unit is expected to be in
the range of $0.34 to $0.40 for the full year ending December 31, 2010.
The following assumptions were used by management:
|
·
|
Same-community
total rental revenue growth of flat to a decline of 2% and
operating expense growth of 1% to 2.5% for the year, resulting in a
decline in NOI of 2% to 7%;
|
|
§
|
Legacy-community
total rental revenue decline of 1.5% to 3.5% and operating expense growth
of 1% to 2.5%, resulting in a decline in NOI of 4% to
8%;
|
|
§
|
Place-community
total rental revenue growth of 2% to 3%, and operating expense growth
of 1% to 2.5% for the year, resulting in NOI growth of 1% to
6%;
|
|
·
|
New-community
NOI growth of approximately $1.5
million;
|
|
·
|
Third-party
development fees from existing projects are expected to be $1.2
million;
|
|
·
|
Third-party
management fees from existing contracts are expected to be $3.0
million;
|
|
·
|
General
and administrative expense of approximately $15.0 to $15.7
million;
|
|
·
|
Interest
expense is expected to range between $23.0 and $24.0
million;
|
|
·
|
Tax
benefit of approximately $1.1 million;
and
|
|
·
|
Full
year weighted average shares/units of 58.1
million.
|
The
guidance for 2010 does not include the impact of any dispositions, acquisitions,
new third-party development or management contracts, additional One Plan
developments, capital transactions or corporate restructuring
costs.
Webcast
and Conference Call
The
Company will host a conference call for investors and other interested parties
beginning at 5:00 p.m. Eastern Time on Tuesday, February 23,
2010. The call will be hosted by Randy Churchey, President and Chief
Executive Officer, and Randy Brown, Executive Vice President and Chief Financial
Officer.
The
conference call will be accessible by telephone and the Internet. To
access the call, participants from within the U.S. may dial (877) 941-2068, and
participants from outside the U.S. may dial (480) 629-9712. The
passcode for this call is 4204728. Participants may also access the
call via live webcast by visiting the Company’s investor relations Web site at
www.educationrealty.com.
The
replay of the call will be available at approximately 7:00 p.m. Eastern Time on
February 23, 2010 through midnight Eastern Time on March 9, 2010. To
access the replay, the domestic dial-in number is (800) 406-7325, the
international dial-in number is (303) 590-3030, and the passcode is
4204728. The archive of the webcast will be available on the
Company’s Web site for a limited time.
4
Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995
Statements
about the Company’s business that are not historical facts are “forward-looking
statements.” Forward-looking statements are based on current expectations. You
should not rely on our forward-looking statements because the matters they
describe are subject to known and unknown risks and uncertainties that could
cause the Company’s future results, performance, or achievements to differ
significantly from the results, performance, or achievements expressed or
implied by such statements. Such risks are set forth under the captions “Item
1A. Risk Factors” and “Forward-Looking Statements” in our annual report on Form
10-K and under the caption “Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations” (or similar captions) in our
quarterly reports on Form 10-Q, and as described in our other filings with the
Securities and Exchange Commission. Forward-looking statements speak only as of
the date on which they are made, and the Company undertakes no obligation to
update publicly or revise any guidance or other forward-looking statement,
whether as a result of new information, future developments, or
otherwise.
Non-GAAP
Financial Measures
As
defined by the National Association of Real Estate Investment Trusts, FFO
represents net income (loss) (computed in accordance with GAAP), excluding gains
(or losses) from sales of property, plus real estate-related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis. The Company
presents FFO available to all stockholders and unitholders because it considers
it an important supplemental measure of the Company’s operating performance,
assists in the comparison of our operating performance between periods to that
of different companies and believes it is frequently used by securities
analysts, investors and other interested parties in the evaluation of REITs,
many of which present FFO when reporting their results. As such, the Company
also excludes the impact of noncontrolling interest in the calculation. FFO is
intended to exclude GAAP historical cost depreciation and amortization of real
estate and related assets, which assumes that the value of real estate
diminishes ratably over time. Historically, however, real estate values have
risen or fallen with market conditions. Because FFO excludes depreciation and
amortization unique to real estate, gains and losses from property dispositions
and extraordinary items, it provides a performance measure that, when compared
year over year, reflects the impact to operations from trends in occupancy
rates, rental rates, operating costs, development activities and interest costs,
providing perspective not immediately apparent from net income.
About
Education Realty Trust
Education
Realty Trust, Inc. (NYSE:EDR) is one of America’s largest owners, developers and
operators of collegiate student housing. EDR is a self-administered
and self-managed real estate investment trust that owns or manages 64
communities in 22 states with 37,827 beds. For more information please visit the
Company's Web site at www.educationrealty.com.
5
Contact:
Brad
Cohen
ICR,
LLC
203-682-8211
bcohen@icrinc.com
6
EDUCATION
REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Amounts
in thousands, except share data)
December 31, 2009
|
December 31, 2008
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Student
housing properties, net
|
$ | 749,884 | $ | 733,507 | ||||
Assets
under development
|
- | 6,572 | ||||||
Cash
and cash equivalents
|
31,169 | 9,003 | ||||||
Restricted
cash
|
4,579 | 5,595 | ||||||
Other
assets
|
18,981 | 22,970 | ||||||
Total
assets
|
$ | 804,613 | $ | 777,647 | ||||
Liabilities
and equity
|
||||||||
Liabilities:
|
||||||||
Mortgage
and construction loans, net of unamortized
premium/discount
|
$ | 406,365 | $ | 442,259 | ||||
Revolving
line of credit
|
- | 32,900 | ||||||
Accounts
payable and accrued expenses
|
11,658 | 10,605 | ||||||
Deferred
revenue
|
10,346 | 9,954 | ||||||
Total
liabilities
|
428,369 | 495,718 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Redeemable
noncontrolling interests
|
11,079 | 11,751 | ||||||
Equity:
|
||||||||
Education
Realty Trust, Inc. stockholders’ equity:
|
||||||||
Common
stock, $0.01 par value, 200,000,000 shares authorized,
|
||||||||
56,705,605
and 28,475,855 shares issued and outstanding at
|
||||||||
December
31, 2009 and 2008, respectively
|
567 | 285 | ||||||
Preferred
shares, $0.01 par value, 50,000,000 shares authorized,
|
||||||||
no
shares issued and outstanding
|
- | - | ||||||
Additional
paid-in capital
|
410,455 | 308,356 | ||||||
Accumulated
deficit
|
(48,636 | ) | (41,381 | ) | ||||
Total
Education Realty Trust, Inc. stockholders’ equity
|
362,386 | 267,260 | ||||||
Noncontrolling
interest
|
2,779 | 2,918 | ||||||
Total
equity
|
365,165 | 270,178 | ||||||
Total
liabilities and equity
|
$ | 804,613 | $ | 777,647 |
7
EDUCATION
REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts
in thousands, except per share data)
Unaudited
Three months ended
December 31, 2009
|
Three months ended
December 31, 2008
|
|||||||
Revenues:
|
||||||||
Student
housing leasing revenue
|
$ | 29,484 | $ | 29,618 | ||||
Student
housing food service revenue
|
631 | 574 | ||||||
Other
leasing revenue
|
- | 200 | ||||||
Third-party
development services
|
2,903 | 2,079 | ||||||
Third-party
management services
|
851 | 995 | ||||||
Operating
expense reimbursements
|
1,973 | 2,604 | ||||||
Total
revenues
|
35,842 | 36,070 | ||||||
Operating
expenses:
|
||||||||
Student
housing leasing operations
|
12,249 | 12,394 | ||||||
Student
housing food service operations
|
577 | 529 | ||||||
General
and administrative
|
4,014 | 4,481 | ||||||
Depreciation
and amortization
|
7,588 | 7,495 | ||||||
Loss
on impairment
|
1,726 | 2,021 | ||||||
Reimbursable
operating expenses
|
1,973 | 2,604 | ||||||
Total operating
expenses
|
28,127 | 29,524 | ||||||
Operating
income
|
7,715 | 6,546 | ||||||
Nonoperating
expenses:
|
||||||||
Interest
expense
|
5,760 | 6,673 | ||||||
Amortization
of deferred financing costs
|
298 | 252 | ||||||
Interest
Income
|
(136 | ) | (106 | ) | ||||
Loss
on extinguishment of debt
|
- | 4,360 | ||||||
Total
nonoperating expenses
|
5,922 | 11,179 | ||||||
Income
(loss) before equity in earnings (losses) of unconsolidated entities,
income taxes, redeemable noncontrolling interests and discontinued
operations
|
1,793 | (4,633 | ) | |||||
Equity
in earnings (losses) of unconsolidated entities
|
(1,404 | ) | 27 | |||||
Less:
Income tax expense
|
717 | 241 | ||||||
Less:
Income attributable to redeemable noncontrolling interests
|
206 | 72 | ||||||
Loss
from discontinued operations
|
- | (18 | ) | |||||
Net
loss
|
(534 | ) | (4,937 | ) | ||||
Less:
Net income (loss) attributable to the noncontrolling
interests
|
1 | (42 | ) | |||||
Net
loss attributable to Education Realty Trust, Inc.
|
$ | (535 | ) | $ | (4,895 | ) | ||
Earnings
per share information:
|
||||||||
Net
loss attributable to Education Realty Trust, Inc. common stockholders per
share – basic & diluted:
|
$ | (0.01 | ) | $ | (0.17 | ) | ||
Weighted-average
common shares outstanding – basic & diluted
|
56,700 | 28,515 |
8
EDUCATION
REALTY TRUST, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts
in thousands, except per share data)
Year ended
December 31, 2009
|
Year ended
December 31, 2008
|
|||||||
(Unaudited)
|
||||||||
Revenues:
|
|
|||||||
Student
housing leasing revenue
|
$ | 110,810 | $ | 107,149 | ||||
Student
housing food service revenue
|
2,267 | 2,378 | ||||||
Other
leasing revenue
|
- | 7,145 | ||||||
Third-party
development services
|
8,178 | 8,303 | ||||||
Third-party
management services
|
3,221 | 3,672 | ||||||
Operating
expense reimbursements
|
9,722 | 10,796 | ||||||
Total
revenues
|
134,198 | 139,443 | ||||||
Operating
expenses:
|
||||||||
Student
housing leasing operations
|
55,161 | 55,120 | ||||||
Student
housing food service operations
|
2,156 | 2,257 | ||||||
General
and administrative
|
15,752 | 16,348 | ||||||
Depreciation
and amortization
|
29,089 | 29,318 | ||||||
Loss
on impairment
|
1,726 | 2,021 | ||||||
Reimbursable
operating expenses
|
9,722 | 10,796 | ||||||
Total operating
expenses
|
113,606 | 115,860 | ||||||
Operating
income
|
20,592 | 23,583 | ||||||
Nonoperating
expenses:
|
||||||||
Interest
expense
|
24,585 | 25,229 | ||||||
Amortization
of deferred financing costs
|
1,047 | 992 | ||||||
Interest
income
|
(470 | ) | (373 | ) | ||||
(Gain)
loss on extinguishment of debt
|
(830 | ) | 4,360 | |||||
Total
nonoperating expenses
|
24,332 | 30,208 | ||||||
Loss
before equity in losses of unconsolidated entities, income taxes,
redeemable noncontrolling interests and discontinued
operations
|
(3,740 | ) | (6,625 | ) | ||||
Equity
in losses of unconsolidated entities
|
(1,410 | ) | (196 | ) | ||||
Less:
Income tax expense
|
1,920 | 1,123 | ||||||
Less:
Income (loss) attributable to redeemable noncontrolling
interests
|
177 | (75 | ) | |||||
Loss
from discontinued operations
|
(21 | ) | (131 | ) | ||||
Net
loss
|
(7,268 | ) | (8,000 | ) | ||||
Less:
Net income (loss) attributable to the noncontrolling
interests
|
(13 | ) | (53 | ) | ||||
Net
loss attributable to Education Realty Trust, Inc.
|
$ | (7,255 | ) | $ | (7,947 | ) | ||
Earnings
per share information:
|
||||||||
Net
loss attributable to Education Realty Trust, Inc. common stockholders per
share – basic & diluted
|
$ | (0.18 | ) | $ | (0.28 | ) | ||
Weighted
average common shares outstanding – basic & diluted
|
40,496 | 28,513 |
9
EDUCATION
REALTY TRUST, INC. AND SUBSIDIARIES
CALCULATION
OF FFO AND FFOA
(Amounts
in thousands, except per share data)
Unaudited
Three months ended
December 31,
|
Year ended
December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
loss attributable to Education Realty Trust, Inc.
|
$ | (535 | ) | $ | (4,895 | ) | $ | (7,255 | ) | $ | (7,947 | ) | ||||
Loss
on sale of student housing assets (1)
|
- | - | - | 512 | ||||||||||||
Real
estate related depreciation and amortization
|
7,482 | 7,296 | 28,497 | 28,720 | ||||||||||||
Equity
portion of real estate depreciation and amortization on equity
investees
|
139 | 125 | 512 | 496 | ||||||||||||
Depreciation
and amortization of discontinued operations
|
- | 26 | 25 | 99 | ||||||||||||
Noncontrolling
interests
|
207 | 30 | 164 | (128 | ) | |||||||||||
Funds
from operations ("FFO")
|
$ | 7,293 | $ | 2,582 | $ | 21,943 | $ | 21,752 | ||||||||
|
||||||||||||||||
Elimination
of impairment and refinancing charges:
|
||||||||||||||||
Development
cost write-off, net of tax
|
- | 417 | - | 417 | ||||||||||||
Loss
on impairment (3)
|
3,173 | 2,021 | 3,173 | 2,021 | ||||||||||||
Gain/loss
on extinguishment of debt
|
- | 4,360 | (830 | ) | 4,360 | |||||||||||
Impact
of impairment and refinancing charges
|
$ | 3,173 | $ | 6,798 | $ | 2,343 | $ | 6,798 | ||||||||
Funds
from operations – adjusted (“FFOA”)
|
$ | 10,466 | $ | 9,380 | $ | 24,286 | $ | 28,550 | ||||||||
FFO
per weighted average share/unit (2)
|
$ | 0.13 | $ | 0.09 | $ | 0.52 | $ | 0.73 | ||||||||
FFOA
per weighted average share/unit (2)
|
$ | 0.18 | $ | 0.31 | $ | 0.58 | $ | 0.96 | ||||||||
Weighted
average shares/units (2)
|
58,086 | 29,872 | 41,873 | 29,867 |
Notes:
(1)
|
Represents
the loss on sale of land and parking garage at University
Towers.
|
(2)
|
FFO
and FFOA per weighted average share/unit was computed using the weighted
average of all shares and partnership units outstanding, regardless of
their dilutive impact.
|
(3)
|
Loss
on impairment for the three months and year ended December 31, 2009
includes $1,447 that is included in equity in earnings of unconsolidated
entities in the statement of
operations.
|
10
EDUCATION
REALTY TRUST, INC. AND SUBSIDIARIES
2010
GUIDANCE – RECONCILIATION OF FFO
(Amounts
in thousands, except per share data)
Unaudited
The
following is a reconciliation of the Company’s 2010 FFO guidance to net
loss:
Year ending December 31, 2010
|
||||||||
Low
End
|
High
End
|
|||||||
Net
loss attributable to Education Realty Trust, Inc.
|
$ | (10,698 | ) | $ | (6,894 | ) | ||
Real
estate related depreciation and amortization
|
29,972 | 29,972 | ||||||
Noncontrolling
interest
|
452 | 376 | ||||||
Funds
from operations ("FFO")
|
$ | 19,726 | $ | 23,454 | ||||
FFO
per weighted average share/unit (1)
|
$ | 0.34 | $ | 0.40 | ||||
Weighted
average shares/units (1)
|
58,096 | 58,096 |
Notes:
(1)
|
Funds
from operations (FFO) per weighted average share/unit was computed using
the weightedaverage
of all shares and partnership units outstanding, regardless of their
dilutive impact.
|
11