Aside from a net loss of $5.8 million, due to a $7.9 million impairment charge, the fourth-quarter 2011 results for EdR (formerly Education Realty Trust) were in line with analyst estimates and indicative of the student housing giant's aggressive growth efforts. Highlights of the REIT’s Feb. 23 earnings call include an increase in same-community net operating income (NOI), by 14.5 percent, and a 7.1 percent increase in revenue over Q3. CEO Randy Churchey seemed pleased with the company’s busy quarter, explaining that EdR had acquired four new communities in Q4 and two additional properties in January of 2012. With these, EdR is supporting its plan to focus on larger institutions and college assets closer to campus.
“This company successfully acquired nine communities with 2,751 beds and an aggregate purchase price of $210.3 million since January 2011,” said Tom Trubiana, EdR’s executive vice president and chief investment officer, in the company’s official release. The additions to the portfolio in the fourth quarter were at the University of Notre Dame, the University of Colorado-Boulder, Texas Christian University, and St. Louis University. Combined, these properties were purchased for $116.7 million.
The news that drew the most attention from analysts was the deal EdR is working on with the University of Kentucky (UK). The company was selected to revitalize UK’s entire campus housing portfolio over the course of the next seven years. This includes assuming ownership and developing existing housing and breaking ground on a new on-campus freshman housing community. “The University of Kentucky deal is unique because we will essentially become University of Kentucky housing,” said Trubiana during the conference call, referring to how EdR will assume control of rental rates for the on-campus housing in the future.
Overall, the company saw a 4.6 percent increase in rental rates during the fourth quarter and project that figure to increase by another 3.5 percent starting with fall leases in 2012. Core funds from operation (FFO) during the fourth quarter were $12.5 million and are expected to be anywhere from 7 percent to 19 percent higher in 2012. EdR estimates put same-store revenue growth for this year between 5 percent and 6.5 percent, overall revenue growth in 2012 at 3.5 percent to 5.5 percent, and NOI growth this year at 6 percent to 9 percent. Currently, EdR owns or manages student housing communities in 23 states, totaling more than 11,000 units.