Form 8-K Education Realty Trust, For: Apr 29
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8‑K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 29, 2015
Education Realty Trust, Inc.
Education Realty Operating Partnership, LP
(Exact Name of Registrant as Specified in Charter)
Maryland | 001-32417 | 20-1352180 | ||
Delaware | 333-199988-01 | 20-1352332 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
999 South Shady Grove Road, Suite 600 Memphis, Tennessee | 38120 | |
(Address of Principal Executive Offices) | (Zip Code) | |
901-259-2500
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On April 29, 2015, Education Realty Trust, Inc. (the "Company") issued a press release announcing its results of operations for the three months ended March 31, 2015 and made available updated supplemental information concerning the ownership, operations and portfolio of the Company. A copy of the press release and this supplemental information are furnished as Exhibits 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K.
This Current Report on Form 8-K and the exhibits attached hereto are being furnished by the Company pursuant to Item 2.02 and Item 7.01 of Form 8-K in satisfaction of the public disclosure requirements of Regulation FD and Item 2.02 of Form 8-K, insofar as they disclose historical information regarding the Company’s results of operations or financial condition for the three months ended March 31, 2015.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2 hereto), shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The disclosure contained in Item 2.02 is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith to this Current Report on Form 8-K.
Exhibit No. | Description | |
99.1 | Press Release dated April 29, 2015 | |
99.2 | First Quarter 2015 Supplemental Financial Report | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EDUCATION REALTY TRUST, INC. | ||
Date: April 29, 2015 | By: | /s/ Edwin B. Brewer, Jr. |
Edwin B. Brewer, Jr. Executive Vice President and Chief Financial Officer | ||
EDUCATION REALTY OPERATING PARTNERSHIP, LP | ||
Date: April 29, 2015 | By: EDUCATION REALTY OP GP, INC., its general partner | |
By: /s/ Edwin B. Brewer, Jr. | ||
Edwin B. Brewer, Jr. Executive Vice President and Chief Financial Officer | ||
INDEX TO EXHIBITS
Exhibit No. | Description | |
99.1 | Press Release dated April 29, 2015 | |
99.2 | First Quarter 2015 Supplemental Financial Report | |
EdR ANNOUNCES FIRST QUARTER 2015 RESULTS |
- Same-Community NOI Growth of 5.8% - |
MEMPHIS, TN, April 29, 2015 - EdR (NYSE: EDR), one of the nation’s largest developers, owners and managers of high-quality collegiate housing communities, today announced results for the quarter ended March 31, 2015.
Company Highlights
• | Core funds from operations (“Core FFO”) increased 25.5% for the first quarter, with Core FFO per share/unit flat to prior year at $0.50, primarily as a result of significant capital transactions completed in 2014. The 2014 capital transactions strengthened our balance sheet and provided additional capacity for funding our development pipeline and additional investment opportunities; |
• | Total community revenue for the first quarter grew 19.1% with net operating income ("NOI") up 27%; |
• | Same-community NOI increased 5.8% for the quarter on a 6.8% increase in revenue and an 8.4% increase in operating expenses. Operating expenses were higher than expected due to a $0.8 million real estate tax provision for the expected settlement of an assessment dispute raised by a local school board at one community that will be retroactive to 2013. Without this charge, operating expenses would have increased 4.0%, in line with guidance; |
• | Preleasing for the 2015-2016 lease term is 140 basis points ahead of last year with the same-community portfolio 76.6% preleased. The same-community portfolio is projected to obtain a 2.5% to 3.5% increase in revenue for the upcoming lease term, with net rates up 3.0% and occupancies consistent with the prior year; |
• | Received four INNOVATOR Awards at the annual Interface conference sponsored by Student Housing Business, including Best Public/Private Partnership for the Company's ONE Plan developments at the University of Kentucky. Since the inception of these awards five years ago, EdR has won a leading 19 INNOVATOR Awards. |
"Internal growth is strong, preleasing is outpacing prior year and our acquisition and development pipeline is active," stated Randy Churchey, EdR's chairman and chief executive officer. "Over the last three years EdR has delivered a 13% compounded annual growth in Core FFO per share and we are well positioned to continue creating shareholder value."
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Net Income Attributable to Common Stockholders
Net income attributable to common stockholders for the quarter was $6.9 million, or $0.14, per diluted share, compared to net income of $12.1 million, or $0.31, per diluted share, for the prior year. The $5.1 million decrease in net income attributable to common shareholders relates primarily to the following:
• | a $7.7 million increase in total community NOI , offset by |
• | no gain on the disposal of assets for 2015 versus $10.9 million in 2014, and |
• | a $2.1 million increase in depreciation most related to communities added in 2014. |
Core Funds From Operations
Core FFO for the quarter was $24.3 million, as compared to $19.4 million in the prior year, an increase of 25.5%. The improvement in Core FFO mainly reflects an increase in NOI from new communities offset by higher ground lease expense, G&A costs and interest expense in 2015. Core FFO per share/unit for the quarter was flat to prior year at $0.50 as a result of dilution from our 2014 capital transactions.
A reconciliation of funds from operations (“FFO”) and Core FFO to net income is included with the financial tables accompanying this release.
Same-Community Results
Net operating income was $28.1 million for the quarter, an increase of 5.8%, or $1.5 million, from the prior year. Same-community revenue was up 6.8% as compared to the prior year with a 3.6% increase in rental rates, a 2.5% improvement in occupancy and a 0.7% increase in other income.
Same-community operating expenses increased 8.4%, or $1.5 million, for the quarter. During the quarter, the Company accrued $0.8 million in real estate tax expense for the expected settlement of an assessment dispute raised by a local school board at one community that will be retroactive to 2013. This charge accounts for 4.4% of the operating expense increase. Excluding this item, operating expenses were up $0.7 million, or 4.0%, for the quarter, which reflects a normalized growth rate from operating the communities and is in line with the Company's guidance range.
2015-2016 Preleasing
The same-community portfolio is currently 140 basis points ahead of prior year with 76.6% of the beds preleased for the fall. Based on current leasing velocity and market conditions, we expect fall occupancy for the same-community portfolio to be consistent with the prior year and rates to be up approximately 3.0%. Combined the Company anticipates rent growth for the 2015-2016 lease term to range from 2.5% to 3.5%.
The above leasing results do not reflect the Company's beds at the University of Kentucky (UK), including 2,982 same-community leasing beds and 1,610 new-community beds being delivered in 2015, as the assignment process does not occur until May. However, at this point all UK beds are currently 131% applied for 2015-2016.
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The Company provides additional leasing information in its quarterly earnings supplement located at http://www.snl.com/irweblinkx/yearlypresentations.aspx?iid=4095382.
Investment Activity
Construction is on schedule for the 2015 developments at the Universities of Kentucky, Georgia, Connecticut and Louisville, with the communities, excluding Kentucky, 79.1% preleased for the fall.
The Company is in the design and development stages of the recently awarded ONE Plan developments at Boise State University, Arkansas State University and the University of Kentucky. These developments are anticipated to be delivered in 2017, for an estimated total investment of $150 million. The initiation and completion of these awarded developments are contingent upon execution of final transactional documents.
The Company's share of costs for announced development deliveries for 2015, 2016 and 2017 is approximately $467.2 million, which will increase collegiate housing assets by 26% from December 31, 2014.
"I am proud of our team for once again receiving multiple INNOVATOR Awards at the annual Interface conference," stated Tom Trubiana, EdR's President. "With the addition of four awards this year, including; Best Public/Private Partnership, Best Vendor/University Solution, Best Architecture/Design and Best Vendor Operator Solution, we are the leading award winner in the industry. Importantly, these awards validate for our university partners that EdR is the leader in the industry with the credentials that provide innovative and progressive ways of creating value for our university partners and other stakeholders."
Capital Structure
At March 31, 2015, the Company had cash and cash equivalents totaling $23.6 million and availability on its unsecured revolving credit facility of $428 million. The Company's debt to gross assets was 35.6%, its net debt to EBITDA - adjusted was 4.7x, and its interest coverage ratio was 5.2x. The Company's capital structure and balance sheet capacity at March 31, 2015 is sufficient to fund its announced developments and acquisitions while maintaining acceptable debt metrics.
During the first quarter, the Company sold 0.3 million shares of common stock under its ATM program at an average price of $35.70, raising net proceeds of $10.6 million. The proceeds were used to pay down the revolving credit facility and fund our development pipeline.
Earnings Guidance and Outlook
Based upon the Company's current estimates, management reaffirms its Core FFO per share/unit guidance, provided on January 22, 2015, of $1.74 to $1.82, for the year ending December 31, 2015. This guidance does not include the impact of any new unannounced third-party development or management contracts, acquisitions, dispositions, ONE PlanSM developments or capital transactions.
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Webcast and Conference Call
EdR will host a conference call for investors and other interested parties beginning at 10:00 a.m. Eastern Time on Wednesday, April 29, 2015. The call will be hosted by Randy Churchey, EdR's chairman and chief executive officer.
The conference call will be accessible by telephone and the Internet. To access the call, participants in the U.S. may dial (877) 705-6003, and participants outside the U.S. may dial (201) 493-6725. Participants may also access the call via live webcast by visiting the company's investor relations Web site at www.EdRTrust.com.
The replay of the call will be available at approximately 1:00 p.m. Eastern Time on Wednesday, April 29, 2015 through midnight Eastern Time on Monday, May 9, 2015. To access the replay, the domestic dial-in number is (877) 870-5176, the international dial-in number is (858) 384-5517, and the passcode is 13604864. The archive of the webcast will be available on the company's Web site for a limited time.
About EdR
One of America's largest owners, developers and managers of collegiate housing, EdR (NYSE: EDR) is a self-administered and self-managed real estate investment trust that owns or manages 73 communities with more than 40,000 beds serving 53 universities in 23 states. EdR is a member of the Russell 2000 Index and the Morgan Stanley REIT indices. For details, please visit the company's Web site at www.EdRtrust.com.
Contact:
Brad Cohen
ICR, LLC
(203) 682-8211
Bill Brewer
EdR
Executive Vice President and
Chief Financial Officer
(901) 259-2500
J. Drew Koester
EdR
Senior Vice President and
Chief Accounting Officer
(901) 259-2500
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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,” which relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements are based on current expectations. You should not rely on forward-looking statements because the matters that they describe are subject to known and unknown risks and uncertainties that could cause the Company’s business, financial condition, liquidity, results of operations, Core FFO, FFO and prospects to differ materially from those expressed or implied by such statements. Such risks are set forth under the captions “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (or similar captions) in EdR's most recent annual report on Form 10-K and quarterly reports on Form 10-Q, and as described in EdR's other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and, except as otherwise may be required by law, 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, except as required by law.
Non-GAAP Financial Measures
Funds from Operations (FFO)
As defined by the National Association of Real Estate Investment Trusts, FFO represents net income (loss) (computed in accordance with U.S. generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of collegiate housing assets and impairment write downs of depreciable real estate, 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 FFO on the same basis. The Company presents FFO available to all stockholders and unitholders because management considers it to be an important supplemental measure of the Company’s operating performance, believes it assists in the comparison of the Company’s operating performance between periods to that of different REITs 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 operating results. As such, the Company also excludes the impact of noncontrolling interests, only as they relate to operating partnership units, 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 and gains and losses from collegiate housing asset 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.
The Company also uses core funds from operations, or Core FFO, as an operating measure. Core FFO is defined as FFO adjusted to include the economic impact of revenue on participating projects for which recognition is deferred for GAAP purposes. The adjustment for this revenue is calculated on the same percentage of completion method used to recognize revenue on third-party development projects. Core FFO
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also includes adjustments to exclude the impact of straight-line adjustment for ground leases, gains/losses on extinguishment of debt, transaction costs related to acquisitions and severance costs. The Company believes that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of the Company’s assets. In addition the Company believes that Core FFO is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as most REITs provide some form of adjusted or modified FFO.
Net Operating Income (NOI)
The Company considers NOI to be a useful measure of its collegiate housing operating performance. The Company defines NOI as rental and other community-level revenues earned from our collegiate housing communities less community-level operating expenses, excluding management fees, depreciation, amortization, ground lease expense and impairment charges and including regional and other corporate costs of supporting the communities. Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs. The Company believes that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. The Company uses NOI to evaluate performance on a community-by-community basis because it allows management to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company’s operating results. However, NOI should only be used as an alternative measure of the Company’s financial performance.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
Adjusted EBITDA is defined as net income or loss excluding: (1) straight line adjustment for ground leases; (2) acquisition costs; (3) depreciation and amortization; (4) loss on impairment of collegiate housing assets; (5) gain on sale of collegiate housing assets and gain on insurance settlement; (6) interest expense; (7) other non-operating expense (income); (8) income tax expense (benefit); and (9) non-controlling interest. Management considers Adjusted EBITDA useful to an investor in evaluating and facilitating comparisons of the Company's operating performance between periods and between REITs by removing the impact of the Company's capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results.
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EdR AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
March 31, 2015 | December 31, 2014 | ||||||||
(unaudited) | |||||||||
Assets | |||||||||
Collegiate housing properties, net | $ | 1,574,006 | $ | 1,586,009 | |||||
Assets under development | 171,039 | 120,702 | |||||||
Cash and cash equivalents | 23,640 | 18,385 | |||||||
Restricted cash | 9,149 | 10,342 | |||||||
Other assets | 74,421 | 76,199 | |||||||
Total assets | $ | 1,852,255 | $ | 1,811,637 | |||||
Liabilities and equity | |||||||||
Liabilities: | |||||||||
Mortgage and construction loans, net of unamortized premium | $ | 230,988 | $ | 249,637 | |||||
Unsecured revolving credit facility | 72,000 | 24,000 | |||||||
Unsecured term loans | 187,500 | 187,500 | |||||||
Senior unsecured notes | 250,000 | 250,000 | |||||||
Accounts Payable and Accrued Expenses | 87,171 | 76,869 | |||||||
Deferred revenue | 18,383 | 17,301 | |||||||
Total liabilities | 846,042 | 805,307 | |||||||
Commitments and contingencies | — | — | |||||||
Redeemable noncontrolling interests | 14,962 | 14,512 | |||||||
Equity: | |||||||||
EdR stockholders’ equity: | |||||||||
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 48,330,648 and 47,999,427 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 483 | 480 | |||||||
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, no shares issued and outstanding | — | — | |||||||
Additional paid-in capital | 1,027,966 | 1,034,683 | |||||||
Accumulated deficit | (34,968 | ) | (41,909 | ) | |||||
Accumulated other comprehensive loss | (6,904 | ) | (4,465 | ) | |||||
Total EdR stockholders’ equity | 986,577 | 988,789 | |||||||
Noncontrolling interests | 4,674 | 3,029 | |||||||
Total equity | 991,251 | 991,818 | |||||||
Total liabilities and equity | $ | 1,852,255 | $ | 1,811,637 | |||||
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EdR AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Revenues: | |||||||
Collegiate housing leasing revenue | $ | 60,383 | $ | 50,711 | |||
Third-party development consulting services | 597 | 802 | |||||
Third-party management services | 1,053 | 1,018 | |||||
Operating expense reimbursements | 2,096 | 2,014 | |||||
Total revenues | 64,129 | 54,545 | |||||
Operating expenses: | |||||||
Collegiate housing leasing operations | 24,140 | 22,168 | |||||
Development and management services | 2,702 | 2,341 | |||||
General and administrative | 2,470 | 2,117 | |||||
Development pursuit, acquisition costs and severance | 169 | 1 | |||||
Depreciation and amortization | 15,866 | 13,783 | |||||
Ground lease expense | 2,848 | 1,899 | |||||
Loss on impairment of collegiate housing properties | — | 1,910 | |||||
Reimbursable operating expenses | 2,096 | 2,014 | |||||
Total operating expenses | 50,291 | 46,233 | |||||
Operating income | 13,838 | 8,312 | |||||
Nonoperating (income) expenses: | |||||||
Interest expense | 5,941 | 5,601 | |||||
Amortization of deferred financing costs | 516 | 503 | |||||
Interest income | (38 | ) | (70 | ) | |||
Loss on extinguishment of debt | — | 649 | |||||
Total nonoperating expenses | 6,419 | 6,683 | |||||
Income before equity in losses of unconsolidated entities, income taxes and gain on sale of collegiate housing properties | 7,419 | 1,629 | |||||
Equity in losses of unconsolidated entities | (194 | ) | (22 | ) | |||
Income before income taxes and gain on sale of collegiate housing properties | 7,225 | 1,607 | |||||
Less: Income tax expense | 78 | 45 | |||||
Income before gain on sale of collegiate housing properties | 7,147 | 1,562 | |||||
Gain on sale of collegiate housing properties | — | 10,902 | |||||
Net income | 7,147 | 12,464 | |||||
Less: Net income attributable to the noncontrolling interests | 206 | 398 | |||||
Net income attributable to Education Realty Trust, Inc. | $ | 6,941 | $ | 12,066 | |||
Other comprehensive loss: | |||||||
Loss on cash flow hedging derivatives | (2,439 | ) | (1,363 | ) | |||
Comprehensive income | $ | 4,502 | $ | 10,703 | |||
Earnings per share information: | |||||||
Net income attributable to Education Realty Trust, Inc. common stockholders per share – basic and diluted | $ | 0.14 | $ | 0.31 | |||
Weighted average share of common stock outstanding – basic | 48,179 | 38,338 | |||||
Weighted average share of common stock outstanding – diluted | 48,501 | 38,684 | |||||
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EdR AND SUBSIDIARIES
CALCULATION OF FFO AND CORE FFO
(Amounts in thousands, except per share/unit data)
(Unaudited)
Three months ended March 31, | |||||||
2015 | 2014 | ||||||
Net income attributable to EdR | $ | 6,941 | $ | 12,066 | |||
Gain on sale of collegiate housing assets | — | (10,902 | ) | ||||
Impairment losses | — | 1,910 | |||||
Real estate related depreciation and amortization | 15,523 | 13,622 | |||||
Equity portion of real estate depreciation and amortization on equity investees | 420 | 49 | |||||
Noncontrolling interests | 212 | 305 | |||||
Funds from operations ("FFO") | $ | 23,096 | $ | 17,050 | |||
FFO adjustments: | |||||||
Loss on extinguishment of debt | — | 649 | |||||
Straight-line adjustment for ground leases (1) | 1,201 | 1,212 | |||||
FFO adjustments | 1,201 | 1,861 | |||||
FFO on Participating Developments: (2) | |||||||
Interest on loan to Participating Development | — | 450 | |||||
FFO on Participating Developments | — | 450 | |||||
Core funds from operations ("Core FFO") | $ | 24,297 | $ | 19,361 | |||
FFO per weighted average share/unit (3) | $ | 0.48 | $ | 0.44 | |||
Core FFO per weighted average share/unit (3) | $ | 0.50 | $ | 0.50 | |||
Weighted average shares/units (3) | 48,501 | 38,684 | |||||
(1) This represents the straight-line rent expense adjustment required by GAAP related to ground leases. As the ground lease terms range from 40 to 99 years, the adjustment to straight-line these agreements becomes material to our operating results, distorting the economic results of the communities. | |||||||
(2) FFO on participating developments in 2014 represents the economic impact of interest and fees not recognized in net income due to the Company having a participating investment in the third-party development. The adjustment for development fees is recognized under the same percentage of completion method of accounting used for third-party development fees. The adjustment for interest income is based on terms of the loan. In July 2014, our mezzanine investment was repaid in full, ending the Company's participation in the project and any fees and interest. At the same time all previously deferred amounts were recognized in net income. | |||||||
(3) FFO and Core FFO per weighted average share/unit were computed using the weighted average of all shares and partnership units outstanding, regardless of their dilutive impact. | |||||||
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EdR AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
The following is a reconciliation of the Company's GAAP operating income to NOI for three months ended March 31, 2015 and 2014 (in thousands):
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
Operating income | $ | 13,838 | $ | 8,312 | |||
Less: Third-party development services revenue | 597 | 802 | |||||
Less: Third-party management services revenue | 1,053 | 1,018 | |||||
Plus: Development and management services expenses | 2,702 | 2,341 | |||||
Plus: General and administrative expenses, development pursuit, acquisition costs and severance | 2,639 | 2,118 | |||||
Plus: Ground leases | 2,848 | 1,899 | |||||
Plus: Impairment loss on collegiate housing properties | — | 1,910 | |||||
Plus: Depreciation and amortization | 15,866 | 13,783 | |||||
NOI | $ | 36,243 | $ | 28,543 | |||
The following is a reconciliation of the Company's GAAP net income to Adjusted EBITDA for the trailing twelve months ended March 31, 2015 (in thousands):
Three Months Ended | Plus: Year Ended | Less: Three Months Ended | Trailing Twelve Months Ended | ||||||||||||
March 31, 2015 | December 31, 2014 | March 31, 2014 | March 31, 2015 | ||||||||||||
Net income attributable to common shareholders | $ | 6,941 | $ | 47,055 | $ | 12,066 | $ | 41,930 | |||||||
Straight line adjustment for ground leases | 1,201 | 4,835 | 1,212 | 4,824 | |||||||||||
Acquisition costs | — | 1,058 | — | 1,058 | |||||||||||
Depreciation and amortization | 15,866 | 58,974 | 13,783 | 61,057 | |||||||||||
Loss on impairment of collegiate housing assets | — | 12,733 | 1,910 | 10,823 | |||||||||||
Gain on sale of collegiate housing assets | — | (33,231 | ) | (10,902 | ) | (22,329 | ) | ||||||||
Gain on insurance settlement | — | (8,133 | ) | — | (8,133 | ) | |||||||||
Interest expense | 5,941 | 20,656 | 5,601 | 20,996 | |||||||||||
Amortization of deferred financing costs | 516 | 2,156 | 503 | 2,169 | |||||||||||
Interest income | (38 | ) | (190 | ) | (70 | ) | (158 | ) | |||||||
Interest on loan to participating development | — | (6,486 | ) | — | (6,486 | ) | |||||||||
Loss on extinguishment of debt | — | 3,543 | 649 | 2,894 | |||||||||||
Income tax expense | 78 | 261 | 45 | 294 | |||||||||||
Noncontrolling interests | 206 | 599 | 398 | 407 | |||||||||||
Adjusted EBITDA | $ | 30,711 | $ | 103,830 | $ | 25,195 | $ | 109,346 | |||||||
Annualize acquisitions, developments and dispositions (1) | — | — | — | 7,350 | |||||||||||
Pro Forma Adjusted EBITDA | $ | 30,711 | $ | 103,830 | $ | 25,195 | $ | 116,696 | |||||||
(1) Pro forma adjustment to reflect all acquisitions, dispositions and development deliveries as if such transactions had occurred on the first day of the period presented. | |||||||||||||||
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 | FINANCIAL HIGHLIGHTS | |
(Amounts in thousands, except per share data, unaudited) | ||||||||||||||
OPERATING DATA: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2015 | 2014 | $ Chg | % Chg | |||||||||||
Same-community revenue | $ | 48,077 | $ | 44,999 | $ | 3,078 | 6.8 | % | ||||||
Total community revenue | 60,383 | 50,711 | 9,672 | 19.1 | % | |||||||||
Total revenue | 64,129 | 54,545 | 9,584 | 17.6 | % | |||||||||
Same-community net operating income | 28,090 | 26,557 | 1,533 | 5.8 | % | |||||||||
Total community net operating income | 36,243 | 28,543 | 7,700 | 27.0 | % | |||||||||
Total operating income | 13,838 | 8,312 | 5,526 | 66.5 | % | |||||||||
Net income | 6,941 | 12,066 | (5,125 | ) | (42.5 | )% | ||||||||
Per share - basic and diluted | $ | 0.14 | $ | 0.31 | $ | (0.17 | ) | (54.8 | )% | |||||
Funds from operations (FFO) | 23,096 | 17,050 | 6,046 | 35.5 | % | |||||||||
Per weighted average share/unit (1) | $ | 0.48 | $ | 0.44 | $ | 0.04 | 9.1 | % | ||||||
Core funds from operations (Core FFO) | 24,297 | 19,361 | 4,936 | 25.5 | % | |||||||||
Per weighted average share/unit (1) | $ | 0.50 | $ | 0.50 | $ | — | — | % | ||||||
FINANCIAL RATIOS: | ||||||||||||||
3/31/2015 | 12/31/2014 | |||||||||||||
Debt to gross assets | 35.6% | 35.1% | ||||||||||||
Net debt to enterprise value | 29.4% | 28.1% | ||||||||||||
Interest coverage ratio (TTM) | 5.2x | 5.0x | ||||||||||||
Net debt to EBITDA - Adjusted (TTM) | 4.7x | 4.9x | ||||||||||||
(1) FFO and Core FFO per share/unit were computed using weighted average shares and units outstanding, regardless of their dilutive impact. See page 5 for a detailed calculation. | ||||||||||||||
FIRST QUARTER 2015 | 1 | |
| BALANCE SHEET | |
(Amount in thousands, except share and per share data) | March 31, 2015 | December 31, 2014 | ||||||||
Assets | (unaudited) | |||||||||
Collegiate housing properties, net (1) | $ | 1,574,006 | $ | 1,586,009 | ||||||
Assets under development | 171,039 | 120,702 | ||||||||
Cash and cash equivalents | 23,640 | 18,385 | ||||||||
Restricted cash | 9,149 | 10,342 | ||||||||
Other assets | 74,421 | 76,199 | ||||||||
Total assets | $ | 1,852,255 | $ | 1,811,637 | ||||||
Liabilities and equity | ||||||||||
Liabilities: | ||||||||||
Mortgage and construction loans, net of unamortized premium | $ | 230,988 | $ | 249,637 | ||||||
Unsecured revolving credit facility | 72,000 | 24,000 | ||||||||
Unsecured term loans | 187,500 | 187,500 | ||||||||
Senior unsecured notes | 250,000 | 250,000 | ||||||||
Accounts payable and accrued expenses | 87,171 | 76,869 | ||||||||
Deferred revenue | 18,383 | 17,301 | ||||||||
Total liabilities | 846,042 | 805,307 | ||||||||
Commitments and contingencies | — | — | ||||||||
Redeemable noncontrolling interests | 14,962 | 14,512 | ||||||||
Equity: | ||||||||||
EdR stockholders' equity: | ||||||||||
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 48,330,648 and 47,999,427 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | 483 | 480 | ||||||||
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||||
Additional paid-in capital | 1,027,966 | 1,034,683 | ||||||||
Accumulated deficit | (34,968 | ) | (41,909 | ) | ||||||
Accumulated other comprehensive loss | (6,904 | ) | (4,465 | ) | ||||||
Total EdR stockholders' equity | 986,577 | 988,789 | ||||||||
Noncontrolling interest | 4,674 | 3,029 | ||||||||
Total equity | 991,251 | 991,818 | ||||||||
Total liabilities and equity | $ | 1,852,255 | $ | 1,811,637 | ||||||
(1) Amount is net of accumulated depreciation of $225,141 and $210,047, as of March 31, 2015 and December 31, 2014, respectively.
FIRST QUARTER 2015 | 2 | |
| OPERATING RESULTS | |
(Amounts in thousands, except per share data, unaudited) | |||||||||||
Three months ended March 31, | |||||||||||
2015 | 2014 | $ Change | |||||||||
Revenues: | |||||||||||
Collegiate housing leasing revenue | $ | 60,383 | $ | 50,711 | $ | 9,672 | |||||
Third-party development consulting services | 597 | 802 | (205 | ) | |||||||
Third-party management services | 1,053 | 1,018 | 35 | ||||||||
Operating expense reimbursements | 2,096 | 2,014 | 82 | ||||||||
Total revenues | 64,129 | 54,545 | 9,584 | ||||||||
Operating expenses: | |||||||||||
Collegiate housing leasing operations | 24,140 | 22,168 | 1,972 | ||||||||
Development and management services | 2,702 | 2,341 | 361 | ||||||||
General and administrative | 2,470 | 2,117 | 353 | ||||||||
Development pursuit, acquisition costs and severance | 169 | 1 | 168 | ||||||||
Depreciation and amortization | 15,866 | 13,783 | 2,083 | ||||||||
Ground lease expense | 2,848 | 1,899 | 949 | ||||||||
Loss on impairment of collegiate housing properties | — | 1,910 | (1,910 | ) | |||||||
Reimbursable operating expenses | 2,096 | 2,014 | 82 | ||||||||
Total operating expenses | 50,291 | 46,233 | 4,058 | ||||||||
Operating income | 13,838 | 8,312 | 5,526 | ||||||||
Nonoperating (income) expenses: | |||||||||||
Interest expense | 5,941 | 5,601 | 340 | ||||||||
Amortization of deferred financing costs | 516 | 503 | 13 | ||||||||
Interest income | (38 | ) | (70 | ) | 32 | ||||||
Loss on extinguishment of debt | — | 649 | (649 | ) | |||||||
Total nonoperating expenses | 6,419 | 6,683 | (264 | ) | |||||||
Income before equity in losses of unconsolidated entities, income taxes and gain on sale of collegiate housing properties | 7,419 | 1,629 | 5,790 | ||||||||
Equity in losses of unconsolidated entities | (194 | ) | (22 | ) | (172 | ) | |||||
Income before income taxes and gain on sale of collegiate housing properties | 7,225 | 1,607 | 5,618 | ||||||||
Income tax expense | 78 | 45 | 33 | ||||||||
Income before gain on sale of collegiate housing properties | 7,147 | 1,562 | 5,585 | ||||||||
Gain on sale of collegiate housing properties | — | 10,902 | (10,902 | ) | |||||||
Net income | 7,147 | 12,464 | (5,317 | ) | |||||||
Less: Net income attributable to the noncontrolling interests | 206 | 398 | (192 | ) | |||||||
Net income attributable to Education Realty Trust, Inc. | $ | 6,941 | $ | 12,066 | $ | (5,125 | ) | ||||
FIRST QUARTER 2015 | 3 | |
| OPERATING RESULTS | |
(Amounts in thousands, except per share data, unaudited) | |||||||||||
Three months ended March 31, | |||||||||||
2015 | 2014 | $ Change | |||||||||
Other comprehensive income (loss): | |||||||||||
Loss on cash flow hedging derivatives | (2,439 | ) | (1,363 | ) | (1,076 | ) | |||||
Comprehensive income | $ | 4,502 | $ | 10,703 | $ | (6,201 | ) | ||||
Earnings per share information: | |||||||||||
Net income attributable to Education Realty Trust, Inc. common stockholders per share – basic and diluted | $ | 0.14 | $ | 0.31 | $ | (0.17 | ) | ||||
Weighted average shares of common stock outstanding – basic | 48,179 | 38,338 | |||||||||
Weighted average shares of common stock outstanding – diluted (1) | 48,501 | 38,684 | |||||||||
(1) Weighted average shares of common stock outstanding - diluted assumes the conversion of outstanding redeemable Operating Partnership Units, University Towers Operating Partnership Units and LTIP Units. | |||||||||||
FIRST QUARTER 2015 | 4 | |
| FUNDS FROM OPERATIONS | |
(Amounts in thousands, except per share data, unaudited) | Three Months Ended March 31, | ||||||||||||
2015 | 2014 | $ Change | |||||||||||
Net income attributable to EdR | $ | 6,941 | $ | 12,066 | $ | (5,125 | ) | ||||||
Gain on sale of collegiate housing assets | — | (10,902 | ) | 10,902 | |||||||||
Impairment losses | — | 1,910 | (1,910 | ) | |||||||||
Real estate related depreciation and amortization | 15,523 | 13,622 | 1,901 | ||||||||||
Equity portion of real estate depreciation and amortization on equity investees | 420 | 49 | 371 | ||||||||||
Noncontrolling interests | 212 | 305 | (93 | ) | |||||||||
Funds from operations ("FFO") | 23,096 | 17,050 | 6,046 | ||||||||||
percent change | 35.5 | % | |||||||||||
FFO adjustments: | |||||||||||||
Loss on extinguishment of debt | — | 649 | (649 | ) | |||||||||
Straight-line adjustment for ground leases (1) | 1,201 | 1,212 | (11 | ) | |||||||||
FFO adjustments | 1,201 | 1,861 | (660 | ) | |||||||||
FFO on Participating Developments:(2) | |||||||||||||
Interest on loan to Participating Development | — | 450 | (450 | ) | |||||||||
FFO on Participating Developments | — | 450 | (450 | ) | |||||||||
Core funds from operations ("Core FFO") | $ | 24,297 | $ | 19,361 | $ | 4,936 | |||||||
percent change | 25.5 | % | |||||||||||
FFO per weighted average share/unit (3) | $ | 0.48 | $ | 0.44 | $ | 0.04 | |||||||
percent change | 9.1 | % | |||||||||||
Core FFO per weighted average share/unit (3) | $ | 0.50 | $ | 0.50 | $ | — | |||||||
percent change | — | % | |||||||||||
Weighted average shares/units (3) | 48,501 | 38,684 | 9,817 | ||||||||||
percent change | 25.4 | % | |||||||||||
(1) This represents the straight-line rent expense adjustment required by GAAP related to ground leases. As the ground lease terms range from 40 to 99 years, the adjustment to straight-line these agreements becomes material to our operating results, distorting the economic results of the communities. | |||||||||||||
(2) FFO on participating developments in 2014 represents the economic impact of interest and fees not recognized in net income due to the Company having a participating investment in the third-party development. The adjustment for development fees is recognized under the same percentage of completion method of accounting used for third-party development fees. The adjustment for interest income is based on terms of the loan. In July 2014, our mezzanine investment was repaid in full, ending the Company's participation in the project and any fees and interest. At the same time all previously deferred amounts were recognized in net income. | |||||||||||||
(3) FFO and Core FFO per weighted average share/unit were computed using the weighted average of all shares and partnership units outstanding, regardless of their dilutive impact. | |||||||||||||
FIRST QUARTER 2015 | 5 | |
| COMMUNITY OPERATING RESULTS | |
(Amounts in thousands, unaudited) | ||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | $ Change | % Change | |||||||||||||
Revenues | ||||||||||||||||
Same-communities(1) | $ | 48,077 | $ | 44,999 | $ | 3,078 | 6.8 | % | ||||||||
New-communities (2) | 11,939 | 98 | 11,841 | NM | ||||||||||||
Sold-communities(3) | — | 5,614 | (5,614 | ) | NM | |||||||||||
CA revenue(4) | 367 | — | 367 | NM | ||||||||||||
Total revenues | 60,383 | 50,711 | 9,672 | 19.1 | % | |||||||||||
Operating expenses (5) | ||||||||||||||||
Same-communities(1) | 19,987 | 18,442 | 1,545 | 8.4 | % | |||||||||||
New-communities (2) | 3,786 | 545 | 3,241 | NM | ||||||||||||
Sold-communities(3) | — | 3,181 | (3,181 | ) | NM | |||||||||||
CA expense(4) | 367 | — | 367 | NM | ||||||||||||
Total operating expenses | 24,140 | 22,168 | 1,972 | 8.9 | % | |||||||||||
Net operating income | ||||||||||||||||
Same-communities(1) | 28,090 | 26,557 | 1,533 | 5.8 | % | |||||||||||
New-communities (2) | 8,153 | (447 | ) | 8,600 | NM | |||||||||||
Sold-communities(3) | — | 2,433 | (2,433 | ) | NM | |||||||||||
Total net operating income | $ | 36,243 | $ | 28,543 | $ | 7,700 | 27.0 | % | ||||||||
(1) Same-communities are defined as those communities that have been open and operating for the whole time in the current and prior periods. See page 23 of this supplement for a listing of same-communities. | ||||||||||||||||
(2) See page 23 of this supplement for a listing of which communities are categorized as new-communities. | ||||||||||||||||
(3) Represents operating results from communities sold in 2014. No communities have been sold in 2015. | ||||||||||||||||
(4) Represents additional same-community revenue and expenses incurred as a result of the Company changing its community assistant program at the end of 2014. The amounts are shown separately as there is no NOI impact and to clearly show the operating growth in revenue and expenses year over year. | ||||||||||||||||
(5) Represents community level operating expenses, excluding management fees, depreciation, amortization, ground lease expense and impairment charges, plus regional and other corporate costs of supporting the communities. | ||||||||||||||||
FIRST QUARTER 2015 | 6 | |
| SAME-COMMUNITY EXPENSES BY CATEGORY | |
(Amounts in thousands, except bed and per-bed data, unaudited) | ||||||||||||||||||||||||||||
Three months ended March 31, 2015 | Three months ended March 31, 2014 | |||||||||||||||||||||||||||
Amount | Per Bed | % of Total Operating Expenses | Amount | Per Bed | % of Total Operating Expenses | $ Change | % Change | |||||||||||||||||||||
Utilities(1) | $ | 5,626 | $ | 244 | 28 | % | $ | 5,432 | $ | 235 | 29 | % | $ | 194 | 3.6 | % | ||||||||||||
On-Site Payroll | 3,492 | 151 | 17 | % | 3,272 | 142 | 18 | % | 220 | 6.7 | % | |||||||||||||||||
General & Administrative(2) | 3,142 | 136 | 16 | % | 3,043 | 132 | 17 | % | 99 | 3.3 | % | |||||||||||||||||
Maintenance & Repairs(3) | 1,118 | 48 | 6 | % | 1,082 | 47 | 6 | % | 36 | 3.3 | % | |||||||||||||||||
Marketing | 998 | 43 | 5 | % | 997 | 43 | 5 | % | 1 | 0.1 | % | |||||||||||||||||
Total Direct Operating Expenses | $ | 14,376 | $ | 622 | 72 | % | $ | 13,826 | $ | 599 | 75 | % | $ | 550 | 4.0 | % | ||||||||||||
Real Estate Taxes | 5,033 | 218 | 25 | % | 4,048 | 175 | 22 | % | 985 | (4) | 24.3 | % | ||||||||||||||||
Insurance | 578 | 25 | 3 | % | 568 | 25 | 3 | % | 10 | 1.8 | % | |||||||||||||||||
Total Fixed Operating Expenses | $ | 5,611 | $ | 243 | 28 | % | $ | 4,616 | $ | 200 | 25 | % | $ | 995 | 21.6 | % | ||||||||||||
Total Property Operating Expenses | $ | 19,987 | $ | 865 | 100 | % | $ | 18,442 | $ | 799 | 100 | % | $ | 1,545 | (4) | 8.4 | % | |||||||||||
Same-community beds | 23,079 | |||||||||||||||||||||||||||
NOTE: Schedule does not include $0.4 million of expenses in 2015 related to the Company's change in its community assistant program at the end of the prior year. See note 4 on page 6. | ||||||||||||||||||||||||||||
(1) Represents gross costs before recoveries from tenants and includes student amenities such as internet. | ||||||||||||||||||||||||||||
(2) Includes property-level general and administrative cost and dining costs as well as regional and other corporate costs of supporting the communities. | ||||||||||||||||||||||||||||
(3) Includes general maintenance costs, grounds and landscaping, turn costs and life safety costs. | ||||||||||||||||||||||||||||
(4) During the first quarter of 2015 the Company accrued an additional $0.8 million in real estate taxes relating to the expected settlement of an assessment dispute with a local school board at one community covering several prior assessment years. Without this charge, real estate taxes would have only increased 4.4% and total operating expenses would have only increased 4.0% over prior year. | ||||||||||||||||||||||||||||
FIRST QUARTER 2015 | 7 | |
| COMMUNITY OPERATIONS - TRAILING FIVE QUARTERS | |
(Amounts in thousands, except beds and per bed amounts) | Three Months Ended | Total / Weighted Average - Trailing Twelve Months | |||||||||||||||||||||||
March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | March 31, 2015 | |||||||||||||||||||||
2015 Same Communities | |||||||||||||||||||||||||
Revenue | $ | 44,999 | $ | 42,094 | $ | 40,064 | $ | 48,669 | $ | 48,077 | $ | 178,904 | |||||||||||||
Operating Expenses | 18,442 | 17,957 | 22,453 | 18,714 | 19,987 | 79,111 | |||||||||||||||||||
Net Operating Income | $ | 26,557 | $ | 24,137 | $ | 17,611 | $ | 29,955 | $ | 28,090 | $ | 99,793 | |||||||||||||
Margin | 59 | % | 57 | % | 44 | % | 62 | % | 58 | % | 56 | % | |||||||||||||
Beds | 69,237 | 69,237 | 69,237 | 69,237 | 69,237 | 276,948 | |||||||||||||||||||
Occupancy(1) | 93.5 | % | 87.3 | % | 89.2 | % | 96.4 | % | 96.0 | % | 92.2 | % | |||||||||||||
Net Apartment Rent per Occupied Bed | $ | 654 | $ | 645 | $ | 583 | $ | 689 | $ | 678 | $ | 650 | |||||||||||||
Other Income per Occupied Bed | 41 | 52 | 66 | 40 | 45 | 51 | |||||||||||||||||||
Total Revenue per Occupied Bed | $ | 695 | $ | 697 | $ | 649 | $ | 729 | $ | 723 | $ | 701 | |||||||||||||
Operating Expense per Available Bed | $ | 266 | $ | 259 | $ | 324 | $ | 270 | $ | 289 | $ | 286 | |||||||||||||
2015 New Communities | |||||||||||||||||||||||||
Revenue | $ | 98 | $ | 89 | $ | 4,928 | $ | 11,823 | $ | 11,939 | $ | 28,779 | |||||||||||||
Operating Expenses | 545 | 629 | 2,180 | 3,012 | 3,786 | 9,607 | |||||||||||||||||||
Net Operating Income | $ | (447 | ) | $ | (540 | ) | $ | 2,748 | $ | 8,811 | $ | 8,153 | $ | 19,172 | |||||||||||
Margin | (456 | )% | (607 | )% | 56 | % | 75 | % | 68 | % | 67 | % | |||||||||||||
Beds | 120 | 120 | 8,256 | 13,674 | 13,674 | 35,724 | |||||||||||||||||||
Occupancy(1) | 95.8 | % | 95 | % | 95.0 | % | 95.6 | % | 95.0 | % | 95.2 | % | |||||||||||||
Net Apartment Rent per Occupied Bed | $ | 729 | $ | 737 | $ | 597 | $ | 883 | $ | 882 | $ | 816 | |||||||||||||
Other Income per Occupied Bed | 120 | 40 | 31 | 22 | 37 | 30 | |||||||||||||||||||
Total Revenue per Occupied Bed | $ | 849 | $ | 777 | $ | 628 | $ | 905 | $ | 919 | $ | 846 | |||||||||||||
Operating Expense per Available Bed | $ | 4,538 | $ | 5,243 | $ | 264 | $ | 220 | $ | 277 | $ | 269 | |||||||||||||
2015 Sold Communities | |||||||||||||||||||||||||
Revenue | $ | 5,614 | $ | 4,127 | $ | 2,664 | $ | 1,153 | $ | — | $ | 7,944 | |||||||||||||
Operating Expenses | 3,181 | 2,389 | 2,287 | 860 | — | 5,536 | |||||||||||||||||||
Net Operating Income | $ | 2,433 | $ | 1,738 | $ | 377 | $ | 293 | $ | — | $ | 2,408 | |||||||||||||
Margin | 43 | % | 42 | % | 14 | % | 25 | % | — | % | 30 | % | |||||||||||||
Beds | 12,912 | 9,549 | 6,383 | 1,628 | — | 17,560 | |||||||||||||||||||
Occupancy(1) | 89.0 | % | 90.0 | % | 88.5 | % | 89.2 | % | — | % | 89.4 | % | |||||||||||||
Net Apartment Rent per Occupied Bed | $ | 464 | $ | 455 | $ | 426 | $ | 754 | $ | — | $ | 472 | |||||||||||||
Other Income per Occupied Bed | 25 | 25 | 46 | 40 | — | 34 | |||||||||||||||||||
Total Revenue per Occupied Bed | $ | 489 | $ | 480 | $ | 472 | $ | 794 | $ | — | $ | 506 | |||||||||||||
Operating Expense per Available Bed | $ | 245 | $ | 250 | $ | 362 | $ | 529 | $ | — | $ | 316 | |||||||||||||
FIRST QUARTER 2015 | 8 | |
| COMMUNITY OPERATIONS - TRAILING FIVE QUARTERS | |
(Amounts in thousands, except beds and per bed amounts) | Three Months Ended | Total / Weighted Average - Trailing Twelve Months | |||||||||||||||||||||||
March 31, 2014 | June 30, 2014 | September 30, 2014 | December 31, 2014 | March 31, 2015 | |||||||||||||||||||||
Other(2) | |||||||||||||||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | 367 | $ | 367 | |||||||||||||
Operating Expenses | — | — | — | — | 367 | 367 | |||||||||||||||||||
Net Operating Income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Margin | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||||||
2015 Total Communities | |||||||||||||||||||||||||
Revenue | $ | 50,711 | $ | 46,310 | $ | 47,656 | $ | 61,645 | $ | 60,383 | $ | 215,994 | |||||||||||||
Operating Expenses | 22,168 | 20,975 | 26,920 | 22,586 | 24,140 | 94,621 | |||||||||||||||||||
Net Operating Income | $ | 28,543 | $ | 25,335 | $ | 20,736 | $ | 39,059 | $ | 36,243 | $ | 121,373 | |||||||||||||
Margin | 56 | % | 55 | % | 44 | % | 63 | % | 60 | % | 56 | % | |||||||||||||
Beds | 82,269 | 78,906 | 83,876 | 84,539 | 82,911 | 330,232 | |||||||||||||||||||
Occupancy(1) | 92.8 | % | 87.6 | % | 89.8 | % | 96.1 | % | 95.8 | % | 92.4 | % | |||||||||||||
Net Apartment Rent per Occupied Bed | 625 | 621 | 572 | 721 | 716 | 661 | |||||||||||||||||||
Other Income per Occupied Bed | 39 | 49 | 61 | 37 | 44 | 47 | |||||||||||||||||||
Total Revenue per Occupied Bed | 664 | 670 | 633 | 758 | 760 | 708 | |||||||||||||||||||
Operating Expense per Available Bed | 269 | 266 | 321 | 268 | 291 | 287 | |||||||||||||||||||
(1) Represents the weighted average physical occupancy for the period presented. | |||||||||||||||||||||||||
(2) Represents additional same-community revenue and expenses incurred as a result of the Company changing its community assistant program at the end of 2014. The amounts are shown separately as there is no NOI impact and to clearly show the operating growth in revenue and expenses year over year. | |||||||||||||||||||||||||
FIRST QUARTER 2015 | 9 | |
| PRELEASING SUMMARY |
Preleasing at April 23, | |||||||||||||||||||||
Design Beds | % of NOI | 2014 Opening Occupancy | 2015 | 2014 | Preleasing Ahead/(Behind) | Projected Rate Growth | |||||||||||||||
Same-Communities - by Tier | |||||||||||||||||||||
Prior Year Occupancy Below 90% (Tier 1) | 2,906 | 6.9 | % | 81.6 | % | 42.0 | % | 38.8 | % | 3.2 | % | 1.4 | % | ||||||||
Prior Year Occupancy 90% to 94.9% (Tier 2) | 2,063 | 9.0 | % | 92.2 | % | 65.4 | % | 70.2 | % | (4.8 | )% | 2.4 | % | ||||||||
Prior Year Occupancy 95% to 97.9% (Tier 3) | 5,772 | 18.5 | % | 97.4 | % | 75.4 | % | 67.8 | % | 7.6 | % | 2.7 | % | ||||||||
Subtotal - Tiers 1 - 3 | 10,741 | 34.4 | % | 92.1 | % | 64.5 | % | 60.4 | % | 4.1 | % | ||||||||||
Prior Year Occupancy 98% and Above (Tier 4) | 13,014 | 65.6 | % | 99.6 | % | 86.7 | % | 87.4 | % | (0.7 | )% | 3.5 | % | ||||||||
Total Same-Communities (1) | 23,755 | 100.0 | % | 96.2 | % | 76.6 | % | 75.2 | % | 1.4 | % | 3.0 | % | ||||||||
Total New-Communities (2) | 1,947 | 79.1 | % | ||||||||||||||||||
Total Communities | 25,702 | 76.8 | % | ||||||||||||||||||
Projected Fall Revenue: | |||||||||||||||||||||
The same-community portfolio is projected to obtain a 2.5% to 3.5% increase in revenue for the upcoming lease term, with net rates up 3% and occupancies consistent with the prior year. | |||||||||||||||||||||
NOTE: Leasing update does not include 2,982 same-community beds or 1,610 new-community beds to be delivered in 2015 at the University of Kentucky. Although the university's assignment process does not occur until May, all 4,592 beds, which include the 601 beds delivered in 2013, 2,381 beds delivered in 2014, and 1,610 beds to be delivered in 2015, are currently over 130% applied for this fall. | |||||||||||||||||||||
(1) The same-community designation for leasing purposes is different than for financial reporting purposes. A community is considered same-community for leasing when the Company has managed the leasing process for at least two leasing cycles, including the 2015/2016 leasing cycle. Design Beds for Same-Communities included in the 2015 Preleasing Summary above include the following design beds: (1) Total same-community design beds on page 23 of 23,079 less (2) 601 design beds at Central Hall I & II at the University of Kentucky (see note above), plus (3) 1,277 design beds on communities that are considered same for leasing purposes (see footnote 1 on page 23). | |||||||||||||||||||||
(2) The new-community designation for leasing purposes is different than for financial statement purposes. A community is considered new-community for leasing when the Company has not previously managed the leasing process. Design beds for Total New-Communities above include the following: (1) our 2014 acquisition of The District on Apache (900 beds) and (2) beds at our 2015 development deliveries - The Oaks on the Square - Phase IV (390 beds) and The Retreat at Louisville (656 beds). | |||||||||||||||||||||
FIRST QUARTER 2015 | 10 | |
| SAME-COMMUNITY PRELEASING BY REGION AND DISTANCE | |
Preleasing at April 23, | ||||||||||||||||||||
Design Beds | % of NOI | 2014 Opening Occupancy | 2015 | 2014 | Preleasing Ahead/(Behind) | Projected Rate Growth | ||||||||||||||
Same-Communities - by Region (1) | ||||||||||||||||||||
Mid-Atlantic | 5,811 | 30.5 | % | 95.0 | % | 84.0 | % | 81.5 | % | 2.5 | % | 3.1 | % | |||||||
Midwest | 2,636 | 7.5 | % | 93.6 | % | 65.6 | % | 58.6 | % | 7.0 | % | 3.0 | % | |||||||
North | 3,206 | 12.9 | % | 99.3 | % | 82.1 | % | 85.9 | % | (3.8 | )% | 3.3 | % | |||||||
South Central | 4,094 | 20.6 | % | 97.9 | % | 82.8 | % | 80.2 | % | 2.6 | % | 3.5 | % | |||||||
Southeast | 5,681 | 18.1 | % | 96.1 | % | 66.3 | % | 67.0 | % | (0.7 | )% | 2.1 | % | |||||||
West | 2,327 | 10.4 | % | 95.4 | % | 77.7 | % | 74.7 | % | 3.0 | % | 3.5 | % | |||||||
Total Same-Communities | 23,755 | 100.0 | % | 96.2 | % | 76.6 | % | 75.2 | % | 1.4 | % | 3.0 | % | |||||||
Same-Communities - by Distance from Campus | ||||||||||||||||||||
0-0.2 miles | 13,310 | 65.9 | % | 97.4 | % | 80.8 | % | 79.5 | % | 1.3 | % | 3.2 | % | |||||||
0.21-0.49 miles | 2,144 | 7.2 | % | 97.1 | % | 73.1 | % | 73.7 | % | (0.6 | )% | 3.7 | % | |||||||
0.5-0.99 miles | 1,004 | 4.1 | % | 99.1 | % | 75.0 | % | 99.0 | % | (24.0 | )% | 2.6 | % | |||||||
1.0-1.99 miles | 5,437 | 17.7 | % | 92.0 | % | 70.3 | % | 58.2 | % | 12.1 | % | 2.6 | % | |||||||
2.0 & > miles | 1,860 | 5.1 | % | 97.9 | % | 70.4 | % | 82.6 | % | (12.2 | )% | 2.5 | % | |||||||
Total Same-Communities | 23,755 | 100.0 | % | 96.2 | % | 76.6 | % | 75.2 | % | 1.4 | % | 3.0 | % | |||||||
NOTE: Leasing update does not include 2,982 same-community beds or 1,610 new-community beds to be delivered in 2015 at the University of Kentucky. Although the university's assignment process does not occur until May, all 4,592 beds, which include the 601 beds delivered in 2013, 2,381 beds delivered in 2014, and 1,610 beds to be delivered in 2015, are currently over 130% applied for this fall. | ||||||||||||||||||||
(1) See definition of regions on page 25. | ||||||||||||||||||||
FIRST QUARTER 2015 | 11 | |
| TOP EdR MARKETS AND STATES BY REVENUE | |
*The data above is based on revenues for the twelve months ended March 31, 2015 and excludes properties that were sold during the period. |
FIRST QUARTER 2015 | 12 | |
| TOP EdR MARKETS AND STATES BY REVENUE | |
*The data above is based on revenues for the twelve months ended March 31, 2015 and excludes properties that were sold during the period. |
FIRST QUARTER 2015 | 13 | |
| NEW SUPPLY AND ENROLLMENT - EdR MARKETS | |
New supply expected to slow 15% from 2014 to 2015 |
EdR Market and Revenue Growth
*Enrollment projection represents the 3-year enrollment CAGR through 2013 for our markets. |
NOTE: The mid-point of previously provided fall 2015 leasing guidance was used for the 2015 revenue growth projections. |
FIRST QUARTER 2015 | 14 | |
| OWNED COMMUNITY PROJECTED 2015 NEW SUPPLY & DEMAND INFORMATION | |
Owned Community Projected 2015 New Supply and Demand Information by Region | ||||||
Region (4) | Owned Beds (3) | Percentage of Owned Beds | EdR NOI % (1) | Enrollment Growth 3 Year CAGR - Universities Served | 2015 New Supply % | Variance |
West | 3,227 | 11% | 12% | 2.2% | 0.5% | 1.7% |
Mid Atlantic | 6,201 | 20% | 25% | 0.8% | 1.6% | (0.8)% |
North | 3,206 | 11% | 9% | 0.6% | 1.8% | (1.2)% |
South Central | 9,342 | 30% | 34% | 1.9% | 1.2% | 0.7% |
Southeast | 5,681 | 19% | 14% | 1.6% | 2.4% | (0.8)% |
Midwest | 2,636 | 9% | 6% | 2.2% | 3.2% | (1.0)% |
Total | 30,293 | 100% | 100% | 1.5% | 1.6% | (0.1)% |
Region (4) | Anticipated 2015 Enrollment Growth (2) | 2015 Supply Growth | Variance | |||
West | 3,259 | 882 | 2,377 | |||
Mid Atlantic | 1,269 | 2,721 | (1,452) | |||
North | 1,391 | 3,136 | (1,745) | |||
South Central | 2,671 | 2,117 | 554 | |||
Southeast | 3,392 | 5,790 | (2,398) | |||
Midwest | 2,053 | 3,064 | (1,011) | |||
Total | 14,035 | 17,710 | (3,675) | |||
NOTE: Schedule represents all markets served by EdR communities and includes all announced 2015 developments. Data was obtained from the National Center for Education Statistics, Axiometrics and local market data. | ||||||
(1) Includes 2015 development deliveries. NOI is based on current 2014 net operating income with proforma adjustments for 2015 developments and developments or acquisitions that have been operating less than 12 months. | ||||||
(2) Extrapolated from 2013 enrollment statistics from National Center for Education Statistics using the previous 3-year enrollment growth percentage. | ||||||
(3) Total Owned Beds reported herein include Total Communities design beds on page 23 of 27,637 plus 1,610 of beds related to the 2015 deliveries at the University of Kentucky, 390 beds for 2015 delivery at the University of Connecticut, and 656 beds for 2015 delivery at the University of Louisville (see page 17). | ||||||
(4) See definition of regions on page 25. | ||||||
FIRST QUARTER 2015 | 15 | |
| OWNED COMMUNITY PROJECTED 2015 NEW SUPPLY & DEMAND INFORMATION | |
Projected 2015 New Supply Sorted by Percentage Increase | |||||
New Supply Growth | University Markets | EdR Bed Count | Pro Forma EdR NOI %(1) | ||
0% | 12 | 33% | 7,328 | 25% | 25% |
0.1% to 1.0% | 6 | 16% | 4,808 | 16% | 13% |
1.0% - 3.0% | 11 | 30% | 12,758 | 42% | 46% |
3.0% - 5.0% | 4 | 11% | 3,101 | 10% | 8% |
> 5.0% | 4 | 10% | 2,298 | 7% | 8% |
Total | 37 | 100% | 30,293 | 100% | 100% |
University Markets with > 5% Increase in 2015 New Supply | |||||
University | New Supply Increase | Pro Forma EdR NOI % | |||
University of Louisville | 8.4% | 2.5% | |||
St. Louis University | 7.3% | 1.2% | |||
University of Oklahoma | 6.8% | 1.2% | |||
University of Alabama | 5.8% | 3.0% | |||
7.9% | |||||
NOTE: Schedule represents all markets served by EdR communities and includes all announced 2015 developments. Data was obtained from the National Center for Education Statistics, Axiometrics and local market data. | |||||
(1) Includes 2015 development deliveries. NOI is based on current 2014 net operating income with proforma adjustments for 2015 developments and developments or acquisitions that have been operating less than 12 months. | |||||
FIRST QUARTER 2015 | 16 | |
| OWNED DEVELOPMENT SUMMARY | |
(Amounts in thousands except bed counts) | |||||||||||||||||||||
Active Projects | Project Type | Bed Count | Estimated Start Date | Anticipated Completion Date | Total Project Development Cost | EdR's Ownership Percentage | EdR's Share of Development Cost | EdR's Share of Development Cost to be Funded | |||||||||||||
University of Kentucky - Woodland Glen III, IV & V | ONE Plan (1) | 1,610 | In progress | Summer 2015 | $ | 101,172 | 100 | % | $ | 101,172 | $ | 12,425 | |||||||||
University of Georgia - Georgia Heights | Joint Venture (2) | 292 | In progress | Summer 2015 | 55,615 | 50 | % | 27,808 | (2) | — | (2) | ||||||||||
University of Connecticut - The Oaks on the Square Ph IV | Wholly Owned | 390 | In progress | Summer 2015 | 45,000 | 100 | % | 45,000 | 28,253 | ||||||||||||
University of Louisville - The Retreat at Louisville | Joint Venture | 656 | In Progress | Summer 2015 | 45,000 | 75 | % | 33,750 | 6,694 | ||||||||||||
Total - 2015 Deliveries | 2,948 | $ | 246,787 | $ | 207,730 | $ | 47,372 | ||||||||||||||
University of Kentucky - Limestone Park I & II | ONE Plan (1) | 1,141 | In progress | Summer 2016 | $ | 83,911 | 100 | % | $ | 83,911 | $ | 70,034 | |||||||||
University of Mississippi - The Retreat - Phase II | Wholly Owned | 350 | In progress | Summer 2016 | 25,600 | 100 | % | 25,600 | 21,395 | ||||||||||||
Total - 2016 Deliveries | 1,491 | $ | 109,511 | $ | 109,511 | $ | 91,429 | ||||||||||||||
Total Active Projects | 4,439 | $ | 356,298 | $ | 317,241 | $ | 138,801 | ||||||||||||||
Recently Awarded - 2017 Deliveries | Project Type | Bed Count | Total Project Development Cost | ||||||||||||||||||
Boise State University | ONE Plan (1) | ||||||||||||||||||||
Arkansas State University | ONE Plan (1) | ||||||||||||||||||||
University of Kentucky | ONE Plan (1) | ||||||||||||||||||||
University of Kentucky - Honors College | ONE Plan (1) | ||||||||||||||||||||
Total Recently Awarded - 2017 Deliveries | 2,000 | $ | 150,000 | ||||||||||||||||||
NOTE: The initiation and completion of an awarded project that has not begun construction is contingent upon execution of transactional documents, including such items as development agreements, construction agreements and ground leases. | |||||||||||||||||||||
(1) The On-Campus Equity Plan, or The ONE PlanSM, is our equity program for universities, which allows universities to use EdR's equity and financial stability to develop and revitalize campus housing while preserving their credit capacity for other campus projects. The ONE Plan SM offers one service provider and one equity source to universities seeking to modernize on-campus housing to meet the needs of today's students. | |||||||||||||||||||||
(2) This project is not majority owned. As such, it will not be consolidated and we will recognize our portion of profits through equity in earnings on the income statement. Also as a result, the costs to be funded only represent EdR’s remaining required equity contribution. | |||||||||||||||||||||
FIRST QUARTER 2015 | 17 | |
| THIRD-PARTY DEVELOPMENT SUMMARY | |
(Amounts in thousands except bed counts) | |||||||||||||||||||
THIRD-PARTY PROJECTS | |||||||||||||||||||
Project | Bed Count | Estimated Start Date | Anticipated Completion Date | Project Development Cost | Total Project Fees | Fees Earned Prior Year (1) | Fees Earned Quarter Ended March 31, 2015 (1) | Remaining Fees to Earn | |||||||||||
Clarion University of Pennsylvania | 728 | Spring 2014 | Fall 2015 | $ | 55,104 | $ | 2,092 | $ | 931 | $ | 394 | $ | 767 | ||||||
University of Cal. Berkeley - Bowles Hall | 186 | Summer 2015 | Summer 2016 | TBD | 1,600 | — | — | 1,600 | |||||||||||
East Stroudsburg University - Pennsylvania Ph II | 488 | Spring 2016 | Summer 2017 | TBD | TBD | — | — | — | |||||||||||
Total | 1,402 | $ | 55,104 | $ | 3,692 | $ | 931 | $ | 394 | $ | 2,367 | ||||||||
NOTE: The initiation and completion of an awarded project that has not begun construction is contingent upon execution of transactional documents, including such items as development agreements and ground leases, and obtaining financing. | |||||||||||||||||||
(1) Amount may not tie to third-party development services revenue on the statement of operations as this schedule only includes fees earned on projects that are in progress or recently completed. | |||||||||||||||||||
FIRST QUARTER 2015 | 18 | |
| CAPITAL STRUCTURE | |
as of March 31, 2015 | Principal Outstanding | Weighted Average Interest Rate | Average Term to Maturity (in years) | ||||||||||||
(Amounts in thousands) | |||||||||||||||
Total Debt to Gross Assets | Fixed Rate - Mortgage Debt | $ | 139,632 | 5.5 | % | 2.9 | |||||||||
Debt(1) | 739,210 | Variable Rate - Mortgage Debt | 34,000 | 2.3 | % | 1.3 | |||||||||
Gross Assets(2) | 2,077,396 | Variable Rate - Construction Debt | 56,078 | 2.0 | % | 1.2 | |||||||||
Debt to Gross Assets | 35.6 | % | Fixed Rate - 5 Yr. Unsecured Term Loan (6) | 65,000 | 2.9 | % | 3.8 | ||||||||
Fixed Rate - 7 Yr. Unsecured Term Loan (6) | 122,500 | 3.9 | % | 5.8 | |||||||||||
Net Debt to Enterprise Value | Fixed Rate - Unsecured Senior Notes | 250,000 | 4.6 | % | 9.7 | ||||||||||
Net Debt(1) | $ | 715,570 | Variable Rate - Unsecured Revolving Credit Facility | 72,000 | 1.4 | % | 3.6 | ||||||||
Market Equity (3) | 1,721,203 | Debt(1) / Weighted Average | $ | 739,210 | 3.9 | % | 5.6 | ||||||||
Enterprise Value | $ | 2,436,773 | Less: Cash | 23,640 | |||||||||||
Net Debt | $ | 715,570 | |||||||||||||
Net Debt to Enterprise Value | 29.4 | % | |||||||||||||
Interest Coverage (TTM)(4) | 5.2x | ||||||||||||||
Net Debt to EBITDA - Adjusted (TTM)(5) | 4.7x | ||||||||||||||
Variable Rate Debt to Total Debt | 21.9% | ||||||||||||||
(1) Excludes unamortized debt premium of $1.3 million. | |||||||||||||||
(2) Excludes accumulated depreciation of $225 million. | |||||||||||||||
(3) Market equity includes 48,330,648 shares of the Company's common stock and 318,389 Operating Partnership Units, which are convertible into common shares, and is calculated using $35.38 per share, the closing price of the Company's common stock on March 31, 2015. | |||||||||||||||
(4) Equals Adjusted EBITDA of $109.3 million divided by interest expense of $21.0 million. See page 22 for reconciliation to Adjusted EBITDA. | |||||||||||||||
(5) Net Debt to EBITDA - Adjusted is calculated to normalize the impact of non-producing construction debt. In the calculation, Net Debt is total debt (excluding the unamortized debt premium) less cash and excludes non-producing debt related to assets under development at time of calculation. EBITDA is Proforma Adjusted EBITDA, which includes proforma adjustments to reflect all acquisitions, development deliveries and dispositions as if such had occurred at the beginning of the 12 month period being presented. | |||||||||||||||
(6) The Trust entered into interest rate swaps to effectively fix the interest rate on the term loans. The weighted average interest rates reflect the swapped (fixed) rate plus the current margin. | |||||||||||||||
FIRST QUARTER 2015 | 19 | |
| CAPITAL STRUCTURE | |
Weighted Average Interest Rate of Debt Maturing Each Year (1) | ||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||
Fixed Rate Mortgage Loans | —% | 4.2% | 5.5% | —% | 6.0% | 5.7% | —% | —% | —% | —% | ||||||||||
Total Debt | 1.8% | 3.1% | 4.3% | 1.4% | 4.3% | 5.7% | 3.9% | —% | —% | 4.6% | ||||||||||
(1) The Trust entered into interest rate swaps to effectively fix the interest rate on the term loans. The weighted average interest rates reflect the swapped (fixed) rate plus the current margin. | ||||||||||||||||||||
FIRST QUARTER 2015 | 20 | |
| UNSECURED SENIOR NOTE COVENANTS | ||
as of March 31, 2015 | ||||||
(Amounts in thousands) | ||||||
Unsecured Senior Note Covenants(1) | Requirement | Current Ratio | ||||
Total Debt to Total Asset Value | ≤ 60% | 35.4% | ||||
Secured Debt to Total Asset Value | ≤ 40% | 11% | ||||
Unencumbered Asset Value to Unsecured Debt | > 150% | 323.1% | ||||
Interest Coverage | > 1.5x | 3.55x | ||||
Calculation of Interest Coverage Ratio: | ||||||
Adjusted Pro Forma EBITDA - TTM: | ||||||
EdR Adjusted EBITDA(2) | $ | 109,346 | ||||
Pro forma Adjustments - acquisitions & dispositions (1) | 1,775 | |||||
Total Adjusted Pro Forma EBITDA - TTM | $ | 111,121 | ||||
Pro Forma Interest Expense - TTM: | ||||||
Interest expense | $ | 20,996 | ||||
Add back: Capitalized interest | 5,980 | |||||
Pro forma adjustments | 4,292 | |||||
Pro forma interest expense - TTM | $ | 31,268 | ||||
Interest Coverage | 3.55x | |||||
(1) Computed in accordance with the First Supplemental Indenture filed November 24, 2014 with the SEC. | ||||||
(2) See page 22 for a reconciliation to EdR Adjusted EBITDA. | ||||||
FIRST QUARTER 2015 | 21 | |
| RECONCILIATION OF NON-GAAP MEASURES | |
(Amounts in thousands) | Three Months | Plus: Year | Less: Three | Trailing Twelve | |||||||||||||
Ended | Ended | Months Ended | Months Ended | ||||||||||||||
Adjusted EBITDA and Pro Forma Adjusted EBITDA: | March 31, 2015 | December 31, 2014 | March 31, 2014 | March 31, 2015 | |||||||||||||
Net income attributable to common shareholders | $ | 6,941 | $ | 47,055 | $ | 12,066 | $ | 41,930 | |||||||||
Straight line adjustment for ground leases | 1,201 | 4,835 | 1,212 | 4,824 | |||||||||||||
Acquisition costs | — | 1,058 | — | 1,058 | |||||||||||||
Depreciation and amortization | 15,866 | 58,974 | 13,783 | 61,057 | |||||||||||||
Loss on impairment of collegiate housing assets | — | 12,733 | 1,910 | 10,823 | |||||||||||||
Gain on sale of collegiate housing assets | — | (33,231 | ) | (10,902 | ) | (22,329 | ) | ||||||||||
Gain on insurance settlement | — | (8,133 | ) | — | (8,133 | ) | |||||||||||
Interest expense | 5,941 | 20,656 | 5,601 | 20,996 | |||||||||||||
Amortization of deferred financing costs | 516 | 2,156 | 503 | 2,169 | |||||||||||||
Interest income | (38 | ) | (190 | ) | (70 | ) | (158 | ) | |||||||||
Interest on loan to participating development | — | (6,486 | ) | — | (6,486 | ) | |||||||||||
Loss on extinguishment of debt | — | 3,543 | 649 | 2,894 | |||||||||||||
Income tax expense (benefit) | 78 | 261 | 45 | 294 | |||||||||||||
Noncontrolling interests | 206 | 599 | 398 | 407 | |||||||||||||
Adjusted EBITDA | $ | 30,711 | $ | 103,830 | $ | 25,195 | $ | 109,346 | |||||||||
Annualize acquisitions, developments and dispositions(1) | — | — | — | 7,350 | |||||||||||||
Pro Forma Adjusted EBITDA | $ | 30,711 | $ | 103,830 | $ | 25,195 | $ | 116,696 | |||||||||
(1) Pro forma adjustment to reflect all acquisitions, development deliveries and dispositions as if such transactions had occurred on the first day of the period presented. | |||||||||||||||||
FIRST QUARTER 2015 | 22 | |
| COMMUNITY LISTING - OWNED | |
Name | Primary University Served | Acquisition/Development Date | # of Beds | Name | Primary University Served | Acquisition/Development Date | # of Beds | |||||||||
Players Club | Florida State University | Jan '05 | 336 | Campus Village | Michigan State University | Oct '12 | 355 | |||||||||
The Commons | Florida State University | Jan '05 | 732 | The Province | Kent State University | Nov '12 | 596 | |||||||||
University Towers | North Carolina State University | Jan '05 | 889 | The Suites at Overton Park | Texas Tech University | Dec '12 | 465 | |||||||||
The Reserve on Perkins | Oklahoma State University | Jan '05 | 732 | The Centre at Overton Park | Texas Tech University | Dec '12 | 400 | |||||||||
The Pointe | Pennsylvania State University | Jan '05 | 984 | The Oaks on the Square | University of Connecticut | Aug '12, Aug '13 | 503 | |||||||||
The Lofts | University of Central Florida | Jan '05 | 730 | 3949 | Saint Louis University | Aug '13 | 256 | |||||||||
The Reserve at Athens | University of Georgia | Jan '05 | 612 | Central Hall I & II (ONE Plan)(2) | University of Kentucky | Aug '13 | 601 | |||||||||
The Reserve at Columbia | University of Missouri | Jan '05 | 676 | 2400 Nueces (ONE Plan) | University of Texas at Austin | Aug '13 | 655 | |||||||||
Commons at Knoxville | University of Tennessee | Jan '05 | 708 | Roosevelt Point | Arizona State University- Downtown Phoenix | Aug '13 | 609 | |||||||||
Campus Creek | University of Mississippi | Feb '05 | 636 | The Retreat at Oxford | University of Mississippi | Aug '13 | 668 | |||||||||
Campus Lodge | University of Florida | Jun '05 | 1,115 | The Retreat at State College | Pennsylvania State University | Sept '13 | 587 | |||||||||
Cape Trails | Southeast Missouri State University | Jan '06 | 360 | The Cottages on Lindberg | Purdue University | Sept '13 | 745 | |||||||||
Carrollton Crossing | University of West Georgia | Jan '06 | 336 | The Varsity | University of Michigan | Dec '13 | 416 | |||||||||
River Pointe | University of West Georgia | Jan '06 | 504 | Total Same-Communities(1) | 23,079 | |||||||||||
The Reserve at Saluki Pointe | Southern Illinois University | Aug '08, Aug '09 | 768 | |||||||||||||
University Village on Colvin (ONE Plan) | Syracuse University | Aug '09 | 432 | The Lotus(1) | University of Colorado, Boulder | Nov '11, Aug '14 | 235 | |||||||||
GrandMarc at The Corner | University of Virginia | Oct '10 | 641 | 605 West(1) | Duke University | Aug '14 | 384 | |||||||||
Wertland Square | University of Virginia | Mar '11 | 152 | 109 Tower(1) | Florida International University | Aug '14 | 542 | |||||||||
Jefferson Commons | University of Virginia | Mar '11 | 82 | The Oaks on the Square- Ph III(1) | University of Connecticut | Aug '14 | 116 | |||||||||
The Berk | University of California, Berkeley | May '11 | 165 | Champions Court II (ONE Plan)(2) | University of Kentucky | Aug '14 | 427 | |||||||||
University Village Towers | University of California, Riverside | Sept '11 | 554 | Haggin Hall I (ONE Plan)(2) | University of Kentucky | Aug '14 | 396 | |||||||||
Irish Row | University of Notre Dame | Nov '11 | 326 | Champions Court I (ONE Plan)(2) | University of Kentucky | Aug '14 | 740 | |||||||||
GrandMarc at Westberry Place (ONE Plan) | Texas Christian University | Dec '11 | 562 | Woodland Glen I & II (ONE Plan)(2) | University of Kentucky | Aug '14 | 818 | |||||||||
The Reserve on Stinson | University of Oklahoma | Jan '12 | 612 | The District on Apache(3) | Arizona State University- Tempe | Sept '14 | 900 | |||||||||
Campus West (ONE Plan) | Syracuse University | Aug '12 | 313 | Total New-Communities | 4,558 | |||||||||||
East Edge | University of Alabama | Aug '12 | 774 | Total Owned-Communities | 27,637 | |||||||||||
The Province | East Carolina University | Sept '12 | 728 | |||||||||||||
The District on 5th | University of Arizona | Oct '12 | 764 | |||||||||||||
(1) The same-community designation for leasing purposes is different than for financial reporting purposes. These communities, except for 601 design beds at Central Hall I & II, are considered same-community for 2015/2016 leasing purposes, as the Company managed the leasing process for the 2014/2015 lease cycle and is currently managing the leasing process for the 2015/2016 lease cycle. Total same-community beds for leasing purposes is 23,755. | ||||||||||||||||
(2) The Kentucky communities, totaling 2,982 beds, are excluded from the leasing update on pages 10 and 11, as the assignment process does not occur until May. | ||||||||||||||||
(3) This property is considered new for purposes of leasing, as we did not manage the leasing process for the 2014/2015 lease year. | ||||||||||||||||
FIRST QUARTER 2015 | 23 | |
| INVESTOR RELATIONS | |
Executive Management | ||||
Randy Churchey | Chief Executive Officer | |||
Tom Trubiana | President | |||
Bill Brewer | Chief Financial Officer | |||
Christine Richards | Chief Operating Officer | |||
J. Drew Koester | Chief Accounting Officer | |||
Corporate Headquarters | Investor Relations | |||
EdR | ICR, LLC | |||
999 South Shady Grove Road, Suite 600 | Brad Cohen | |||
Memphis, TN 38120 | (203) 682-8211 | |||
(901) 259-2500 | ||||
Covering Analysts | ||||
Firm | Analyst | Contact # | Email | |
Bank of America - Merrill | Jana Galan | (646) 855-3081 | ||
Green Street Advisors | Dave Bragg | (949) 706-8142 | ||
Goldman Sachs | Andrew Rosivach | (212) 902-2796 | ||
Hilliard Lyons | Carol Kemple | (502) 588-1839 | ||
J.P. Morgan Securities Inc. | Anthony Paolone | (212) 622-6682 | ||
KeyBanc Capital Markets | Jordan Sadler | (917) 368-2280 | ||
MLV & Co., LLC | Ryan Meliker | (212) 542-5872 | ||
RBC Capital Market | Mike Salinsky | (440) 715-2648 | ||
Robert W Baird & Co. | Drew T. Babin | (215) 553-7816 | ||
Sandler O'Neill + Partners, L.P. | Alex Goldfarb | (212) 466-7937 | ||
Stifel Nicolaus & Company Inc. | Rod Petrik | (443) 224-1306 | ||
UBS Securities | Ross Nussbaum | (212) 713-2484 | ||
Wunderlich Securities | Craig Kucera | (540) 277-3366 | ||
FIRST QUARTER 2015 | 24 | |
| DEFINITIONS | |
Design beds | Represents the sum of the monthly design beds in the portfolio during the period. |
FFO | Funds from operations as defined by the National Association of Real Estate Investment Trusts. |
GAAP | U.S. generally accepted accounting principles. |
Net apartment rent per occupied bed (NarPOB) | Represents GAAP net apartment rent for the respective period divided by the sum of occupied beds in the portfolio for each month included in the period reported. |
Net debt to EBITDA - adjusted | Net debt to EBITDA - adjusted is calculated to normalize the impact of non-producing construction debt. In the calculation, net debt is total debt less cash and excludes non-producing debt related to assets under development at time of calculation. EBITDA is Pro Forma Adjusted EBITDA, which includes proforma adjustments to reflect all acquisitions, dispositions and development assets that are open as if such had occurred at the beginning of the 12 month period being presented. |
Operating expense per bed | Represents community-level operating expenses excluding management fees, depreciation and amortization. |
Other income per available bed | Represents other GAAP-based income for the respective period divided by the sum of the design beds in the portfolio for each of the included months. Other income includes service/application fees, late fees, termination fees, parking fees, transfer fees, damage recovery, utility recovery, and other misc. |
Physical occupancy | Represents a weighted average of the month end occupancies for each month included in the period reported. |
Regional Definitions | Regions are defined as follows: Mid-Atlantic: North Carolina, Pennsylvania, Connecticut, New York, Virginia; Midwest: Oklahoma, Missouri; North: Michigan, Ohio, Indiana, Illinois; South Central: Texas, Tennessee, Mississippi, Kentucky; Southeast: Florida, Alabama, Georgia; West: Arizona, California, Colorado. |
Revenue per occupied bed (RevPOB) | Represents total revenue (net apartment rent plus other income) for the respective period divided by the sum of occupied beds in the portfolio for each month included in the period reported. |
Same community | Includes communities that have been owned for more than a year as of the beginning of the current fiscal year. |
FIRST QUARTER 2015 | 25 | |
| SAFE HARBOR | |
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,” which relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements are based on current expectations. You should not rely on our forward-looking statements because the matters that they describe are subject to known and unknown risks and uncertainties that could cause the Company’s business, financial condition, liquidity, results of operations, Core FFO, FFO and prospects to differ materially from those expressed or implied by such statements. Such risks are set forth under the captions “Risk Factors,” “Forward-Looking Statements” and "Management’s Discussion and Analysis of Financial Condition and Results of Operations” (or similar captions) in our most recent Annual Report on Form 10-K and 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, except as otherwise may be required by law, 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 except as required by law.
FIRST QUARTER 2015 | 26 | |