Edgar Filing: Education Realty Trust, Inc.

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-32417

Education Realty Trust, Inc.

Education Realty Operating Partnership, LP

(Exact Name of Registrant as Specified in Its Charter)



Maryland		20-1352180
Delaware		20-1352332
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)



999 South Shady Grove Road, Suite 600 Memphis, Tennessee		38120
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code (901) 259-2500

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Education Realty Trust, Inc. Yes x No o

Education Realty Operating Partnership, LP Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Education Realty Trust, Inc. Yes x No o

Education Realty Operating Partnership, LP Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Education Realty Trust, Inc.



Large accelerated filer x		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Education Realty Operating Partnership, LP



Large accelerated filer o		Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Education Realty Trust, Inc. Yes o No x

Education Realty Operating Partnership, LP Yes o No x

As of April 28, 2016, Education Realty Trust, Inc. had 66,068,105 shares of common stock outstanding.

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended March 31, 2016 of Education Realty Trust, Inc. and Education Realty Operating Partnership, LP. Unless stated otherwise or the context otherwise requires, references to “EdR” mean only Education Realty Trust, Inc., a Maryland corporation, and references to "EROP" mean only Education Realty Operating Partnership, LP, a Delaware limited partnership. References to the "Trust," "we," "us," or "our" mean collectively EdR, EROP and those entities/subsidiaries owned or controlled by EdR and/or EROP. References to the "Operating Partnership" mean collectively EROP and those entities/subsidiaries owned or controlled by EROP. The following chart illustrates our corporate structure:

The general partner of EROP is Education Realty OP GP, Inc. (the “OP GP”), an entity that is indirectly wholly-owned by EdR. As of March 31, 2016, OP GP held an ownership interest in EROP of less than 1%. The limited partners of EROP are Education Realty OP Limited Partner Trust, a wholly-owned subsidiary of EdR, and other limited partners consisting of current and former members of management. The OP GP, as the sole general partner of EROP, has the responsibility and discretion in the management and control of the Operating Partnership, and the limited partners of EROP, in such capacity, have no authority to transact business for, or participate in the management activities of the Operating Partnership. Management operates EdR and the Operating Partnership as one business. The management of EdR consists of the same members as the management of the Operating Partnership.

The Trust is structured as an umbrella partnership real estate investment trust (“UPREIT”) and EdR contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, EdR receives an equal number of partnership units of EROP (the “OP Units”). Contributions of properties to the Trust can be structured as tax-deferred transactions through the issuance of OP Units. Holders of OP Units may tender their OP Units for redemption by the Operating Partnership in exchange for cash equal to the market price of EdR's common stock at the time of redemption or, at EdR's option, for shares of EdR's common stock. Pursuant to the partnership agreement of EROP, the number of shares to be issued upon the redemption of OP Units is equal to the number of OP Units being redeemed. Additionally, for every one share of common stock offered and sold by EdR for cash, EdR must contribute the net proceeds to EROP and, in return, EROP will issue one OP Unit to EdR.

The Trust believes that combining the quarterly reports on Form 10-Q of EdR and the Operating Partnership into this single report provides the following benefits:


•	enhances investors’ understanding of the Trust by enabling investors to view the business of EdR and the Operating Partnership as a whole in the same manner as management views and operates the business;


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both EdR and the Operating Partnership; and


•	creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

EdR consolidates the Operating Partnership for financial reporting purposes, and EdR essentially has no assets or liabilities other than its investment in the Operating Partnership. Therefore, the assets and liabilities of EdR and the Operating Partnership are the same on their respective financial statements. However, the Trust believes it is important to understand the few differences between EdR and the Operating Partnership in the context of how the entities operate as a consolidated company. All of the Trust's property ownership, development and related business operations are conducted through the Operating Partnership. EdR also issues public equity from time to time and guarantees certain debt of EROP. EdR does not have any indebtedness, as all debt is incurred by the Operating Partnership. The Operating Partnership holds all of the assets of the Trust, including the Trust’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from EdR’s equity offerings, which are contributed to the capital of EROP in exchange for OP Units on the basis of one share of common stock for one OP Unit, the Operating Partnership generates all remaining capital required by the Trust's business, including as a result of the incurrence of indebtedness. These sources include, but are not limited to, the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its credit facilities, proceeds from mortgage indebtedness and debt issuances, and proceeds received from the disposition of certain properties. Noncontrolling interests, stockholders’ equity, and partners’ capital are the main areas of difference between the condensed consolidated financial statements of the Trust and those of the Operating Partnership. The noncontrolling interests in the Operating Partnership’s financial statements consist of the interests of unaffiliated partners in various consolidated joint ventures. The noncontrolling interests in the Trust's financial statements include the same noncontrolling interests at the Operating Partnership level. The differences between stockholders’ equity and partners’ capital result from differences in the type of equity issued by EdR and the Operating Partnership.

To help investors understand the significant differences between the Trust and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Trust and the Operating Partnership. A single set of consolidated notes to such financial statements is presented that includes separate discussions for the Trust and the Operating Partnership when applicable (for example, noncontrolling interests, stockholders’ equity or partners’ capital, earnings per share or unit, etc.). A combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents discrete information related to each entity, as applicable.

In order to highlight the differences between the Trust and the Operating Partnership, the separate sections in this report for the Trust and the Operating Partnership specifically refer to the Trust and the Operating Partnership. In the sections that combine disclosure of the Trust and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Trust. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Trust is appropriate because the Trust operates its business through the Operating Partnership. The separate discussions of the Trust and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Trust on a consolidated basis and how management operates the Trust.

Education Realty Trust, Inc.

Education Realty Operating Partnership, LP

Form 10-Q

For the Quarter Ended March 31, 2016

Table of Contents



		Page Number
PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements of Education Realty Trust, Inc. and Subsidiaries:
	Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015	1
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015	2
	Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2016 and 2015	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	5
Condensed Consolidated Financial Statements of Education Realty Operating Partnership, LP and Subsidiaries:
	Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015	7
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015	8
	Condensed Consolidated Statements of Changes in Partners' Capital and Noncontrolling Interests for the three months ended March 31, 2016 and 2015	10
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	11
Notes to Condensed Consolidated Financial Statements		13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		34
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		52
Item 4. Controls and Procedures.		53

PART II - OTHER INFORMATION
Item 1. Legal Proceedings.		54
Item 1A. Risk Factors.		54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		54
Item 3. Defaults Upon Senior Securities.		55
Item 4. Mine Safety Disclosures.		55
Item 5. Other Information.		55
Item 6. Exhibits.		55
Signatures.		56

PART I - Financial Information

Item 1. Financial Statements.

EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

(Unaudited)



	March 31, 2016			December 31, 2015
Assets:
Collegiate housing properties, net	$	1,744,189		$	1,774,796
Assets under development	185,328			117,384
Cash and cash equivalents	195,848			33,742
Restricted cash	8,930			9,784
Other assets	63,005			66,125
Total assets	$	2,197,300		$	2,001,831

Liabilities:
Mortgage and construction loans, net of unamortized premium and deferred financing costs	$	118,266		$	204,511
Unsecured revolving credit facility	—			—
Unsecured term loan, net of unamortized deferred financing costs	186,581			186,518
Unsecured senior notes, net of unamortized deferred financing costs	247,743			247,678
Accounts payable and accrued expenses	93,459			85,670
Deferred revenue	19,795			19,024
Total liabilities	665,844			743,401

Commitments and contingencies (see Note 7)	—			—

Redeemable noncontrolling interests	10,676			13,560

Equity:
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 65,011,662 and 56,879,003 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	650			569
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, no shares issued and outstanding	—			—
Additional paid-in capital	1,525,104			1,263,603
Accumulated deficit	(5,329		)	(21,998		)
Accumulated other comprehensive loss	(8,921		)	(5,475		)
Total Education Realty Trust, Inc. stockholders’ equity	1,511,504			1,236,699
Noncontrolling interests	9,276			8,171
Total equity	1,520,780			1,244,870
Total liabilities and equity	$	2,197,300		$	2,001,831

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share data)

(Unaudited)



	Three Months Ended March 31,
	2016			2015
Revenues:
Collegiate housing leasing revenue	$	70,183		$	60,383
Third-party development consulting services	483			597
Third-party management services	894			1,053
Operating expense reimbursements	1,819			2,096
Total revenues	73,379			64,129
Operating expenses:
Collegiate housing leasing operations	24,889			24,140
Development and management services	2,521			2,702
General and administrative	3,109			2,639
Depreciation and amortization	17,516			15,866
Ground lease expense	3,309			2,848
Reimbursable operating expenses	1,819			2,096
Total operating expenses	53,163			50,291

Operating income	20,216			13,838

Nonoperating (income) expenses:
Interest expense	4,663			5,941
Amortization of deferred financing costs	480			516
Interest income	(74		)	(38		)
Loss on extinguishment of debt	9,920			—
Total nonoperating expenses	14,989			6,419
Income before equity in losses of unconsolidated entities, income taxes and gain on sale of collegiate housing properties	5,227			7,419
Equity in losses of unconsolidated entities	(244		)	(194		)
Income before income taxes and gain on sale of collegiate housing properties	4,983			7,225
Income tax expense	51			78
Income before gain on sale of collegiate housing properties	4,932			7,147
Gain on sale of collegiate housing properties	11,873			—
Net income	16,805			7,147
Less: Net income attributable to the noncontrolling interests	136			206
Net income attributable to Education Realty Trust, Inc.	$	16,669		$	6,941

See accompanying notes to the condensed consolidated financial statements.



	Three Months Ended March 31,
	2016			2015
Comprehensive income:
Net income	$	16,805		$	7,147
Other comprehensive loss:
Loss on cash flow hedging derivatives	(3,446		)	(2,439		)
Comprehensive income	$	13,359		$	4,708
Less: Comprehensive income attributable to the noncontrolling interests	136			206
Comprehensive income attributable to Education Realty Trust, Inc.	$	13,223		$	4,502

Earnings per share information:
Net income attributable to Education Realty Trust, Inc. common stockholders per share – basic	$	0.27		$	0.14
Net income attributable to Education Realty Trust, Inc. common stockholders per share – diluted	$	0.26		$	0.14

Distributions per share of common stock	$	0.37		$	0.36

Weighted average common shares outstanding:
Weighted average common shares outstanding – basic	62,677			48,179
Weighted average common shares outstanding – diluted	62,963			48,501

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands, except shares)

(Unaudited)



	Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
	Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance, December 31, 2014	47,999,427	$	480	$	1,034,683		$	(41,909	)	$	(4,465	)	$	3,029		$	991,818
Proceeds from issuance of common stock, net of offering costs	327,605	3		11,497			—			—			—			11,500
Amortization of restricted stock and long-term incentive plan awards	3,616	—		355			—			—			—			355
Cash dividends	—	—		(17,299		)	—			—			—			(17,299		)
Contributions from noncontrolling interests	—	—		—			—			—			1,667			1,667
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—		44			—			—			—			44
Comprehensive income (loss)	—	—		—			6,941			(2,439		)	(22		)	4,480
Balance, March 31, 2015	48,330,648	$	483	$	1,029,280		$	(34,968	)	$	(6,904	)	$	4,674		$	992,565


Balance, December 31, 2015	56,879,003	$	569	$	1,263,603		$	(21,998	)	$	(5,475	)	$	8,171		$	1,244,870
Proceeds from issuance of common stock, net of offering costs	8,130,670	81		286,964			—			—			—			287,045
Amortization of restricted stock and long-term incentive plan awards	1,989	—		357			—			—			—			357
Cash dividends	—	—		(23,392		)	—			—			—			(23,392		)
Contributions from noncontrolling interests	—	—		—			—			—			3,571			3,571
Purchase of noncontrolling interests	—	—		(1,706		)	—			—			(2,409		)	(4,115		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—		(722		)	—			—			—			(722		)
Comprehensive income (loss)	—	—		—			16,669			(3,446		)	(57		)	13,166
Balance, March 31, 2016	65,011,662	$	650	$	1,525,104		$	(5,329	)	$	(8,921	)	$	9,276		$	1,520,780

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



	Three Months Ended March 31,
	2016			2015
Operating activities:
Net income	$	16,805		$	7,147
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,516			15,866
Loss on disposal of assets	7			—
Gain on sale of collegiate housing properties	(11,873		)	—
Noncash rent expense related to the straight-line adjustment for long-term ground leases	1,187			1,201
Loss on extinguishment of debt	9,920			—
Amortization of deferred financing costs	480			516
Amortization of unamortized debt premiums	(49		)	(207		)
Distributions of earnings from unconsolidated entities	—			44
Noncash compensation expense related to stock-based incentive awards	827			671
Equity in losses of unconsolidated entities	244			194
Change in operating assets and liabilities (net of acquisitions)	2,486			3,397
Net cash provided by operating activities	37,550			28,829

Investing activities:
Property acquisitions	(24,357		)	—
Purchase of corporate assets	(263		)	(257		)
Restricted cash	854			1,193
Investment in collegiate housing properties	(4,521		)	(2,884		)
Proceeds from sale of collegiate housing properties	54,107			—
Advances under notes receivable	—			(1,717		)
Collections on notes receivable	1,667			—
Earnest money deposits	(735		)	(200		)
Investment in assets under development	(64,975		)	(43,781		)
Distributions from unconsolidated entities	121			—
Investments in unconsolidated entities	—			(53		)
Net cash used in investing activities	(38,102		)	(47,699		)

See accompanying notes to the condensed consolidated financial statements.



	Three Months Ended March 31,
	2016			2015
Financing activities:
Payment of mortgage loans	(98,384		)	(33,986		)
Borrowings under construction loans	12,444			15,544
Debt issuance costs	(55		)	(39		)
Debt extinguishment costs	(10,290		)	—
Borrowings on line of credit	—			48,000
Proceeds from issuance of common stock	286,611			10,569
Payment of offering costs	(307		)	(29		)
Purchase and return of equity to noncontrolling interests	(7,025		)	—
Contributions from noncontrolling interests	3,571			1,693
Dividends and distributions paid to common and restricted stockholders	(23,392		)	(17,299		)
Dividends and distributions paid to noncontrolling interests	(200		)	(115		)
Repurchases of common stock for payments of restricted stock tax withholding	(315		)	(213		)
Net cash provided by financing activities	162,658			24,125
Net increase in cash and cash equivalents	162,106			5,255
Cash and cash equivalents, beginning of period	33,742			18,385
Cash and cash equivalents, end of period	$	195,848		$	23,640

Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized	$	2,285		$	3,287
Income taxes paid	$	3		$	—

Supplemental disclosure of noncash activities:
Redemption of redeemable noncontrolling interests from unit holder to shares of common stock	$	938		$	960
Capital expenditures in accounts payable and accrued expenses related to developments	$	25,059		$	24,939

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except unit data)

(Unaudited)



	March 31, 2016			December 31, 2015
Assets:
Collegiate housing properties, net	$	1,744,189		$	1,774,796
Assets under development	185,328			117,384
Cash and cash equivalents	195,848			33,742
Restricted cash	8,930			9,784
Other assets	63,005			66,125
Total assets	$	2,197,300		$	2,001,831

Liabilities:
Mortgage and construction loans, net of unamortized premium and deferred financing costs	$	118,266		$	204,511
Unsecured revolving credit facility	—			—
Unsecured term loans, net of unamortized deferred financing costs	186,581			186,518
Unsecured senior notes, net of unamortized deferred financing costs	247,743			247,678
Accounts payable and accrued expenses	93,459			85,670
Deferred revenue	19,795			19,024
Total liabilities	665,844			743,401

Commitments and contingencies (see Note 7)	—			—

Redeemable limited partner units	8,114			8,312

Redeemable noncontrolling interests	2,562			5,248

Partners' capital:
General partner - 6,920 units outstanding as of March 31, 2016 and December 31, 2015, respectively	184			184
Limited partners - 65,004,742 and 56,872,083 units issued and outstanding as of March 31, 2016 and December 31, 2015, respectively	1,520,241			1,241,990
Accumulated other comprehensive loss	(8,921		)	(5,475		)
Total partners' capital	1,511,504			1,236,699
Noncontrolling interests	9,276			8,171
Total partners' capital	1,520,780			1,244,870
Total liabilities and partners' capital	$	2,197,300		$	2,001,831

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands, except per unit data)

(Unaudited)



	Three Months Ended March 31,
	2016			2015
Revenues:
Collegiate housing leasing revenue	$	70,183		$	60,383
Third-party development consulting services	483			597
Third-party management services	894			1,053
Operating expense reimbursements	1,819			2,096
Total revenues	73,379			64,129
Operating expenses:
Collegiate housing leasing operations	24,889			24,140
Development and management services	2,521			2,702
General and administrative	3,109			2,639
Depreciation and amortization	17,516			15,866
Ground lease expense	3,309			2,848
Reimbursable operating expenses	1,819			2,096
Total operating expenses	53,163			50,291

Operating income	20,216			13,838

Nonoperating (income) expenses:
Interest expense	4,663			5,941
Amortization of deferred financing costs	480			516
Interest income	(74		)	(38		)
Loss on extinguishment of debt	9,920			—
Total nonoperating expenses	14,989			6,419
Income before equity in losses of unconsolidated entities, income taxes and gain on sale of collegiate housing properties	5,227			7,419
Equity in losses of unconsolidated entities	(244		)	(194		)
Income before income taxes and gain on sale of collegiate housing properties	4,983			7,225
Income tax expense	51			78
Income before gain on sale of collegiate housing properties	4,932			7,147
Gain on sale of collegiate housing properties	11,873			—
Net income	16,805			7,147
Less: Net income attributable to the noncontrolling interests	78			166
Net income attributable to Education Realty Operating Partnership	$	16,727		$	6,981

See accompanying notes to the condensed consolidated financial statements.



	Three Months Ended March 31,
	2016			2015
Comprehensive income:
Net income	$	16,805		$	7,147
Other comprehensive income:
Loss on cash flow hedging derivatives	(3,446		)	(2,439		)
Comprehensive income	13,359			4,708
Less: Comprehensive income attributable to the noncontrolling interests	78			166
Comprehensive income attributable to unitholders	$	13,281		$	4,542

Earnings per unit information:
Net income attributable to unitholders – basic and diluted	$	0.27		$	0.14

Weighted average units outstanding:
Weighted average units outstanding – basic	62,894			48,432
Weighted average units outstanding – diluted	62,963			48,501

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND NONCONTROLLING INTERESTS

(Amounts in thousands, except units)

(Unaudited)



	General Partner				Limited Partners				Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
	Units	Amount			Units	Amount			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total
Balance, December 31, 2014	6,920	$	191		47,992,507	$	993,063		$	(4,465	)	$	3,029		$	991,818
Issuance of units in exchange for contributions of equity offering proceeds and redemption of units	—	—			327,605	11,500			—			—			11,500
Amortization of restricted stock and long-term incentive plan awards	—	—			3,616	355			—			—			355
Distributions	—	(2		)	—	(17,297		)	—			—			(17,299		)
Contributions from noncontrolling interests	—	—			—	—			—			1,667			1,667
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—			—	44			—			—			44
Comprehensive income (loss)	—	1			—	6,940			(2,439		)	(22		)	4,480
Balance, March 31, 2015	6,920	$	190		48,323,728	$	994,605		$	(6,904	)	$	4,674		$	992,565


Balance, December 31, 2015	6,920	$	184		56,872,083	$	1,241,990		$	(5,475	)	$	8,171		$	1,244,870
Issuance of units in exchange for contributions of equity offering proceeds and redemption of units	—	—			8,130,670	287,045			—			—			287,045
Amortization of restricted stock and long-term incentive plan awards	—	—			1,989	357			—			—			357
Distributions	—	(3		)	—	(23,389		)	—			—			(23,392		)
Contributions from noncontrolling interests	—	—			—	—			—			3,571			3,571
Purchase of noncontrolling interests	—	—			—	(1,706		)	—			(2,409		)	(4,115		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—			—	(722		)	—			—			(722		)
Comprehensive income (loss)	—	3			—	16,666			(3,446		)	(57		)	13,166
Balance, March 31, 2016	6,920	$	184		65,004,742	$	1,520,241		$	(8,921	)	$	9,276		$	1,520,780

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



	Three Months Ended March 31,
	2016			2015
Operating activities:
Net income	$	16,805		$	7,147
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,516			15,866
Loss on disposal of assets	7			—
Gain on sale of collegiate housing properties	(11,873		)	—
Noncash rent expense related to the straight-line adjustment for long-term ground leases	1,187			1,201
Loss on extinguishment of debt	9,920			—
Amortization of deferred financing costs	480			516
Amortization of unamortized debt premiums	(49		)	(207		)
Distributions of earnings from unconsolidated entities	—			44
Noncash compensation expense related to stock-based incentive awards	827			671
Equity in losses of unconsolidated entities	244			194
Change in operating assets and liabilities (net of acquisitions)	2,486			3,397
Net cash provided by operating activities	37,550			28,829

Investing activities:
Property acquisitions	(24,357		)	—
Purchase of corporate assets	(263		)	(257		)
Restricted cash	854			1,193
Investment in collegiate housing properties	(4,521		)	(2,884		)
Proceeds from sale of collegiate housing properties	54,107			—
Advances under notes receivable	—			(1,717		)
Collections on notes receivable	1,667			—
Earnest money deposits	(735		)	(200		)
Investment in assets under development	(64,975		)	(43,781		)
Distributions from unconsolidated entities	121			—
Investments in unconsolidated entities	—			(53		)
Net cash used in investing activities	(38,102		)	(47,699		)

Financing activities:
Payment of mortgage loans	(98,384		)	(33,986		)
Borrowings under construction loans	12,444			15,544
Debt issuance costs	(55		)	(39		)
Debt extinguishment costs	(10,290		)	—
Borrowings on line of credit	—			48,000
Proceeds from issuance of common units in exchange for contributions	286,611			10,569
Payment of offering costs	(307		)	(29		)
Purchase and return of equity to noncontrolling interests	(7,025		)	—
Contributions from noncontrolling interests	3,571			1,693

See accompanying notes to the condensed consolidated financial statements.



	Three Months Ended March 31,
	2016			2015
Distributions paid on unvested restricted stock and long-term incentive plan awards	(69		)	(8		)
Distributions paid to unitholders	(23,323		)	(17,291		)
Distributions paid to noncontrolling interests	(200		)	(115		)
Repurchases of units for payments of restricted stock tax withholding	(315		)	(213		)
Net cash provided by financing activities	162,658			24,125
Net increase in cash and cash equivalents	162,106			5,255
Cash and cash equivalents, beginning of period	33,742			18,385
Cash and cash equivalents, end of period	$	195,848		$	23,640

Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized	$	2,285		$	3,287
Income taxes paid	$	3		$	—

Supplemental disclosure of noncash activities:
Redemption of redeemable noncontrolling interests from unit holder to shares of common stock	$	938		$	960
Capital expenditures in accounts payable and accrued expenses related to developments	$	25,059		$	24,939

See accompanying notes to the condensed consolidated financial statements.

EDUCATION REALTY TRUST, INC. AND SUBSIDIARIES

EDUCATION REALTY OPERATING PARTNERSHIP, L.P. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and description of business

Education Realty Trust, Inc. ("EdR" and collectively with its consolidated subsidiaries, the “Trust”) was organized in the state of Maryland on July 12, 2004 and commenced operations effective with the initial public offering that was completed on January 31, 2005. Through the Trust's controlling interest in both the sole general partner and the majority owning limited partner of Education Realty Operating Partnership L.P. ("EROP" and collectively with its consolidated subsidiaries, the "Operating Partnership"), the Trust is one of the largest developers, owners and managers of collegiate housing communities in the United States in terms of beds owned and under management. The Trust is a self-administered and self-managed real estate investment trust ("REIT") that is publicly traded on the New York Stock Exchange under the ticker symbol "EDR." Under the Articles of Incorporation, as amended, the Trust is authorized to issue up to 200 million shares of common stock and 50 million shares of preferred stock, each having a par value of $0.01 per share.

The sole general partner of EROP is Education Realty OP GP, Inc. (“OP GP”), an entity that is indirectly wholly-owned by EdR. As of March 31, 2016, OP GP held an ownership interest in EROP of less than 1%. The limited partners of EROP are Education Realty OP Limited Partner Trust, a wholly-owned subsidiary of EdR, and other limited partners consisting of current and former members of management. OP GP, as the sole general partner of EROP, has the responsibility and discretion in the management and control of EROP, and the limited partners of EROP, in such capacity, have no authority to transact business for, or participate in the management activities of EROP. Management operates the Trust and the Operating Partnership as one business. The management of the Trust consists of the same members as the management of the Operating Partnership. EdR consolidates the Operating Partnership for financial reporting purposes, and EdR does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of the Trust and the Operating Partnership are the same on their respective financial statements. Unless otherwise indicated, the accompanying Notes to the Condensed Consolidated Financial Statements apply to both the Trust and the Operating Partnership.

The Trust also provides real estate facility management, development and other advisory services through one of our taxable REIT subsidiaries ("TRS"), EDR Management Inc. (our “Management Company”), a Delaware corporation performing collegiate housing management activities. EDR Development LLC (our “Development Company”), a Delaware limited liability company and wholly owned subsidiary of the Management Company providing development consulting services for third-party collegiate housing communities, is a disregarded entity for federal income tax purposes and all assets owned and income earned by our Development Company are deemed to be owned and earned by our Management Company.

2. Summary of significant accounting policies

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States (“GAAP”). The accompanying condensed consolidated financial statements of the Trust represent the assets and liabilities and operating results of the Trust and its majority owned subsidiaries.

All intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

Principles of consolidation

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810) ("ASU 2015-02"), which amends the consolidation requirements in ASC 810, Consolidation, and makes changes to both the variable interest model and the voting model of consolidation. Under ASU 2015-02, companies will need to reevaluate whether an entity meets the criteria to be considered a variable interest entity (“VIE”) or whether the consolidation of an entity should be assessed under the voting model. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, and eliminates the presumption in the previous

voting model that a general partner should consolidate a limited partnership or similar entity unless the presumption can be overcome. ASU 2015-02 was effective for the Trust and the Operating Partnership as of January 1, 2016. The adoption of the new standard did not result in the consolidation of entities not previously consolidated or the deconsolidation of any entities previously consolidated.

The Trust accounts for interests in partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the amended guidance. The Trust first evaluates whether each entity is a VIE. Under the VIE model, the Trust consolidates an entity when it has control to direct the activities of the VIE and where it is determined to be the primary beneficiary. Under the voting interest model, the Trust consolidates an entity when it controls the entity through the ownership of a majority voting interest.

Upon adoption, the Operating Partnership and certain properties that have noncontrolling interests (see Note 8) became VIEs as the limited partners of these entities lack substantive kick-out rights and substantive participating rights. The Trust continues to consolidate these entities as the primary beneficiary because it directs the activities that most significantly impact the economic performance of the VIEs and has an obligation to absorb potentially significant losses or the right to receive potentially significant benefits of the VIEs. EdR has the power and economic exposure through the rights held by OP GP as it relates to the Operating Partnership, while EROP has power and economic exposure through its role as the property manager and equity interest holder of certain properties with noncontrolling interests (see Note 8).

All of the Trust's property ownership, development and related business operations are conducted through the Operating Partnership. See the assets and liabilities of the Operating Partnership in the accompanying condensed consolidated financial statements.

Interim financial information

The accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the Trust's financial position, results of operations and cash flows for such periods. Because of the seasonal nature of the business, the operating results and cash flows are not necessarily indicative of results that may be expected for any other interim periods or for the full fiscal year. These financial statements should be read in conjunction with the Trust's consolidated financial statements and related notes included in the Trust's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission (the "SEC") on February 29, 2016.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Notes receivable

On August 26, 2013, the Trust provided a $0.5 million promissory loan to College Park Apartments, Inc. ("CPA"), the Trust's partner in the unconsolidated joint venture University Village-Greensboro LLC (see Note 5), at an interest rate of 10% per annum and a maturity date of August 1, 2020. Under the loan, CPA can make one draw per calendar quarter. As of March 31, 2016 and December 31, 2015, the outstanding balance was $0.5 million for both periods. The loan is secured by CPA's interest in the joint venture.

On March 20, 2015, the Trust provided a $1.7 million promissory loan to Concord Eastridge, Inc, the Trust's partner in the joint venture at Roosevelt Point, at an interest rate equal to 2% plus London InterBank Offered Rate ("LIBOR") per annum compounded monthly and a maturity date of March 1, 2017. The loan was secured by Concord Eastridge's interest in the joint venture. As of December 31, 2015, $1.7 million was outstanding. In February 2016, the Trust acquired Concord Eastridge, Inc.'s remaining partnership interest for $4.9 million in cash. The outstanding promissory loan was repaid in full at closing.

Collegiate housing properties

Land, land improvements, buildings and improvements, and furniture, fixtures and equipment are recorded at cost. Buildings and improvements are depreciated over 15 to 40 years, land improvements are depreciated over 15 years and furniture, fixtures, and equipment are depreciated over 3 to 7 years. Depreciation is computed using the straight-line method for financial reporting purposes over the estimated useful life.

The Trust capitalizes interest based on the weighted average interest costs of total debt, and internal development costs while developments are ongoing, as assets under development. When the property opens, these costs, along with other direct costs of the development, are transferred into the applicable asset category and depreciation commences.

Acquired collegiate housing communities’ results of operations are included in the Trust’s results of operations from the respective dates of acquisition. Appraisals, estimates of cash flows and other valuation techniques are used to allocate the purchase price of acquired property between land, land improvements, buildings and improvements, furniture, fixtures and equipment and identifiable intangibles such as amounts related to in-place leases. Acquisition costs are expensed as incurred and are included in general and administrative expenses in the accompanying condensed consolidated statements of income and comprehensive income.

Management assesses impairment of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management uses an estimate of future undiscounted cash flows of the related asset based on its intended use to determine whether the carrying value is recoverable. If the Trust determines that the carrying value of an asset is not recoverable, the fair value of the asset is estimated and an impairment loss is recorded to the extent the carrying value exceeds estimated fair value. Management estimates fair value using discounted cash flow models, market appraisals if available, and other market participant data. During the three months ended March 31, 2016 and 2015, there were no impairment losses recognized.

When a collegiate housing community has met the criteria to be classified as held for sale, the fair value less cost to sell such asset is estimated. If the fair value less cost to sell the asset is less than the carrying amount of the asset, an impairment charge is recorded for the estimated loss. Depreciation expense is no longer recorded once a collegiate housing community has met the held for sale criteria. Dispositions that represent a strategic shift in the business will qualify for treatment as discontinued operations. The property disposition during the three months ended March 31, 2016 did not qualify for treatment as discontinued operations and, as a result, the operations of the property are included in continuing operations in the accompanying condensed consolidated statements of income and comprehensive income.

Redeemable noncontrolling interests (the Trust) / redeemable limited partners (EROP)

The Trust follows the guidance issued by the FASB regarding the classification and measurement of redeemable securities. The Trust classifies redeemable noncontrolling interests, which include redeemable interests in consolidated joint ventures and units of limited partnership interest in University Towers Operating Partnership, LP and in the Operating Partnership in the mezzanine section of the accompanying condensed consolidated balance sheets.

In the accompanying condensed consolidated balance sheets of the Operating Partnership, the redeemable units of limited partnership in the Operating Partnership are classified as redeemable limited partners and the redeemable interests in consolidated joint ventures and units of limited partnership in University Towers Operating Partnership, LP are classified as redeemable noncontrolling interests. The redeemable noncontrolling interest units / redeemable limited partner units are adjusted to the greater of carrying value or fair market value based on the price per share of EdR's common stock at the end of each respective reporting period.

Common stock issuances and offering costs

Specific incremental costs directly attributable to the issuance of EdR common stock are charged against the gross proceeds of the related issuance. Accordingly, underwriting commissions and other stock issuance costs are reflected as a reduction of additional paid-in capital in the accompanying condensed consolidated statement of changes in equity.

The Trust is structured as an umbrella partnership REIT ("UPREIT") and contributes all proceeds from its various equity offerings to EROP. For every one share of common stock offered and sold by EdR for cash, EdR must contribute the net proceeds to EROP and, in return, EROP will issue one OP Unit to EdR.

During October 2014, the Trust entered into agreements to establish an at-the-market equity offering program ("ATM Program") authorized to sell a maximum of $150.0 million in additional shares of EdR common stock. The Trust sold approximately 1.3 million shares under these distribution agreements during the three months ended March 31, 2016 and received net proceeds of approximately $51.1 million. The Trust sold 0.3 million shares under these distribution agreements during the three months ended March 31, 2015 and received net proceeds of $10.5 million.

On January 15, 2016, the Trust completed a follow-on equity offering of approximately 6.3 million shares of EdR common stock. The Trust received approximately $215.1 million in net proceeds from the offering after deducting the underwriting discount and other offering expenses payable by the Trust. Of the total net proceeds, approximately $108.5 million was used to pay off $98.2 million of fixed rate mortgage debt bearing an average effective interest rate of 5.4% and $10.3 million of prepayment penalties associated with the early extinguishment of debt.

On March 24, 2016, we issued approximately 0.5 million shares of our common stock for a total of approximately $20.0 million pursuant to the direct stock purchase component of the Amended and Restated Dividend Reinvestment and Direct Stock Purchase Plan.

Income taxes

EdR qualifies as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). EdR is generally not subject to federal, state and local income taxes on any of its taxable income that it distributes if it distributes at least 90% of its REIT taxable income for each tax year to its stockholders and meets certain other requirements. If EdR fails to qualify as a REIT for any taxable year, EdR will be subject to federal, state and local income taxes (including any applicable alternative minimum tax) on its taxable income.

The Trust has elected to treat certain of its subsidiaries, including the Management Company, as TRSs. A TRS is subject to federal, state and local income taxes. The Management Company provides management services and through the Development Company, provides development services, which if directly provided by the Trust would jeopardize EdR’s REIT status. Deferred tax assets and liabilities are recognized based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect in the years in which those temporary differences are expected to reverse.

The Trust had no unrecognized tax benefits as of March 31, 2016 and December 31, 2015. The Trust and its subsidiaries file federal and state income tax returns. As of March 31, 2016, open tax years generally included tax years for 2013, 2014 and 2015. The Trust’s policy is to include interest and penalties related to unrecognized tax benefits in general and administrative expenses. For each of the three months ended March 31, 2016 and 2015, the Trust had no interest or penalties recorded related to unrecognized tax benefits.

Goodwill and other intangible assets

Goodwill is tested annually for impairment as of December 31, and is tested for impairment more frequently if events and circumstances indicate that the carrying value of the assets might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The accumulated impairment loss recorded is $0.4 million. No additional impairment has been recorded through March 31, 2016. The carrying value of goodwill was $3.1 million as of March 31, 2016 and December 31, 2015, of which $2.1 million was recorded on the management services segment and $0.9 million was recorded on the development consulting services segment. Goodwill is not subject to amortization. Other intangible assets generally include in-place leases acquired in connection with acquisitions and are amortized over the estimated life of the lease/contract term. The carrying value of other intangible assets was $0.3 million and $0.2 million as of March 31, 2016 and December 31, 2015, respectively.

Investment in unconsolidated entities

The Trust accounts for its investments in unconsolidated joint ventures using the equity method whereby the costs of an investment are adjusted for the Trust’s share of earnings of the respective investment reduced by distributions received. The earnings and distributions of the unconsolidated joint ventures are allocated based on each owner’s respective ownership interests. These investments are classified as other assets or accrued expenses, depending on whether the distributions exceed the Trust’s contributions and share of earnings in the joint ventures, in the accompanying condensed consolidated balance sheets (see Note 5).

Earnings per share

Earnings per Share - The Trust

Basic earnings per share is calculated by dividing net earnings available to common stockholders by weighted average shares of common stock outstanding, including outstanding units in the Operating Partnership designated as LTIP Units ("LTIP Units"). Diluted earnings per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of potentially dilutive securities. The Trust follows the authoritative guidance regarding the determination of whether certain instruments are participating securities. All unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are included in the computation of earnings per share under the two-class method. This results in shares of unvested restricted stock and LTIP Units being included in the computation of basic earnings per share for all periods presented.

Earnings per OP Unit - EROP

Basic earnings per unit is calculated by dividing net earnings available to unitholders by the weighted average number of OP Units and LTIP Units outstanding. Diluted earnings per unit is calculated similarly, except that it includes the dilutive effect of the assumed exercise of potentially dilutive securities. EROP follows the authoritative guidance regarding the determination of whether certain instruments are participating securities.

Recent accounting pronouncements

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years. The Trust is currently evaluating the impact of this guidance.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"), which requires a lessee to recognize

in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing

its right to use the underlying asset for the lease term. ASU 2016-02 is effective for annual reporting periods beginning after

December 15, 2018, and interim periods within those years. The Trust is currently evaluating the impact of this guidance.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), as amended by ASU 2015-04 to defer the effective date. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including the guidance on real estate derecognition for most transactions. ASU 2014-09 provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years and permits the use of either the retrospective or cumulative effect transition method. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. Since the issuance of ASU 2014-09, the FASB has issued ASU 2016-08 that is intended to improve the understandability of the implementation guidance regarding principal versus agent considerations and has issued ASU 2016-10 to clarify the identification of performance obligations and the implementation guidance related to licensing. The effective dates of these amendments are the same as ASU 2014-09. The Trust is currently evaluating the provisions of this guidance.

3. Acquisition and development of real estate investments

Acquisition of collegiate housing properties

2016 Acquisition

On March 31, 2016, the Trust completed the acquisition of the Lokal with 79 units consisting of 194 beds serving Colorado State University in Fort Collins, Colorado for a contract price of $24.6 million. The acquisition was funded from proceeds of the sale of 605 West (see Note 4) and from the follow-on equity offering completed in January 2016 (see Note 2). Acquisition

costs of $0.1 million were incurred related to this transaction and are included in general and administrative expenses in the accompanying condensed statements of income and comprehensive income for the three months ended March 31, 2016.

Due to the timing of the completion of the acquisition, work is still ongoing to determine the fair values of the assets acquired and liabilities assumed as of the acquisition date. Below is the preliminary allocation of the purchase price as of the date of the acquisition (in thousands):



Collegiate housing property	$	24,350
In-place leases	152
Other assets	3
Current liabilities	(148		)
Total net assets acquired	$	24,357

The $0.2 million difference between the contracted price of $24.6 million and the net assets set forth in the table above represents working capital and other liabilities that were not part of the contractual purchase price, but were acquired.

The unaudited pro forma information had the acquisition date been January 1, 2016 is as follows (in thousands, except per share and per unit amounts):



	Three months ended
	March 31, 2016
Total revenue ⁽¹⁾	$	73,881
Net income attributable to the Trust ⁽¹⁾	$	16,922
Net income attributable to common shareholders - basic and diluted	$	0.27

Net income attributable to EROP ⁽¹⁾	$	16,982
Net income attributable to unitholders - basic and diluted	$	0.27

⁽¹⁾As the Lokal first opened for the 2015/2016 lease year, supplemental pro forma revenue and net income information is not available for the period January 1, 2015 - March 31, 2015.

During the three months ended March 31, 2016, the Trust also entered into binding agreements to acquire the following collegiate housing communities located in Fort Collins, Colorado serving Colorado State University for total consideration of $24.0 million:


•	Pura Vida Place, which has 52 units consisting of 100 beds; and


•	Carriage House, which has 54 units consisting of 94 beds.

2015 Acquisitions

During the year ended December 31, 2015, the Trust completed the following two collegiate housing property acquisitions:

Acquisition

Contract Price

Name

Primary University Served

Date

# of Beds

# of Units

(in thousands)

The Commons on Bridge

University of Tennessee Knoxville, Tennessee

June 2015

150

9,700

The Province at Boulder

University of Colorado Boulder, Colorado

Sept 2015

317

48,800

Below is the allocation of the purchase price to the fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):



	The Commons on Bridge			The Province at Boulder			Total
Collegiate housing properties	$	9,624		$	48,522		$	58,146
In-place leases	76			278			354
Other assets	5			85			90
Current liabilities	(338		)	(376		)	(714		)
Total net assets acquired	$	9,367		$	48,509		$	57,876

The $0.6 million difference between contracted price of $58.5 million and the net assets set forth in the table above represents working capital and other liabilities that were not part of the contractual purchase price, but were acquired.

In conjunction with the acquisition of the The Province at Boulder, the Trust entered into a reverse Section 1031 like-kind exchange agreement with a third party intermediary, which, for a maximum of 180 days, allows us to defer for tax purposes gains on the sale of other properties identified and sold within this period. Until the earlier of the termination of the exchange agreements or 180 days after the respective acquisition date, the third party intermediary is the legal owner of the property; however, the Trust controls the activities that most significantly impact the property and retains all of the economic benefits and risks associated with the property. Therefore, at the date of the acquisition, it was determined that the Trust was the primary beneficiary of this VIE and consolidated the property and its operations as of the respective acquisition date. As of December 31, 2015, this VIE had total assets of $48.6 million and liabilities of $0.3 million.

The reverse Section 1031 like-kind exchange was completed during March 2016 in connection with the sale of 605 West (see Note 4). As of March 31, 2016, the exchange agreements were terminated and the Trust is now the legal owner of The Province at Boulder.

The unaudited pro forma information had the acquisition date for the 2015 acquisitions been January 1, 2014 is as follows (in thousands, except per share and per unit amounts):



	Three months ended March 31, 2015
Total revenue	$	65,295
Net income attributable to the Trust	$	7,366
Net income attributable to common shareholders - basic and diluted	$	0.15

Net income attributable to EROP	$	7,408
Net income attributable to unitholders - basic and diluted	$	0.15

Development of collegiate housing properties

During 2015, the Trust developed the following communities which opened during the 2015/2016 lease year. The costs incurred to date for our owned communities represent the balance capitalized in collegiate housing properties, net as of December 31, 2015 (dollars in thousands):



Name	Primary University Served	Bed Count	Costs Incurred as of December 31, 2015		Internal Development Costs Capitalized		Interest Costs Capitalized
Name	Primary University Served	Bed Count	Costs Incurred as of December 31, 2015		Three months ended March 31, 2015
Woodland Glen III, IV & V	University of Kentucky	1,610	$	103,458	$	90	$	799
The Oaks on the Square - Phase IV	University of Connecticut	391	44,325		47		163
The Retreat at Louisville	University of Louisville	656	43,935		57		160
Total - owned communities		2,657	191,718		194		1,122
Georgia Heights ⁽¹⁾	University of Georgia	292	51,639		49		106
Total joint ventures		292	51,639		49		106
Total		2,949	$	243,357	$	243	$	1,228

⁽¹⁾The costs above represent total costs incurred for the joint venture development. The Trust holds a 50% interest in the joint venture and manages the community. The Trust does not consolidate the joint venture and its investment in the community of $10.3 million and $10.4 million as of March 31, 2016 and December 31, 2015, respectively, is classified as other assets in the accompanying condensed consolidated balance sheets.

The following represents a summary of active developments as of March 31, 2016, including internal development costs and interest costs capitalized (dollars in thousands):



Name	Primary University Served	Bed Count	Costs Incurred as of March 31, 2016		Internal Development Costs Capitalized		Interest Costs Capitalized
Name	Primary University Served	Bed Count	Costs Incurred as of March 31, 2016		Three months ended March 31, 2016
Limestone Park I & II	University of Kentucky	1,141	$	71,663	$	83	$	633
Retreat at Oxford - Phase II	University of Mississippi	350	21,874		21		195
University Flats	University of Kentucky	771	17,501		60		117
Lewis Hall	University of Kentucky	346	2,297		71		2
Boise State University	Boise State University	656	1,675		52		9
Retreat at Blacksburg - Phase I & II	Virginia Polytechnic Institute and State University	829	42,438		32		208
SkyVue	Michigan State University	824	21,678		85		132
The Local: Downtown	Texas State University	304	6,202		74		83
Total active projects under development		5,221	$	185,328	$	478	$	1,379

As of March 31, 2016, the Trust is contractually obligated to fund remaining amounts under guaranteed maximum price contracts with the general contractor of approximately $252.0 million to complete these developments.

All costs related to the development of collegiate housing communities are classified as assets under development in the accompanying condensed consolidated balance sheets until the community is completed and opened.

4. Disposition of real estate investments

During the three months ended March 31, 2016, the 605 West collegiate housing community located in Durham, North Carolina was sold for a gross sales price of approximately $54.6 million. The Trust received net proceeds of approximately $54.1 million after deducting the closing costs and recognized a $11.9 million gain on this disposition. Previous to the sale, the Trust acquired the joint venture partner's interest for $2.1 million. The net income attributable to this property is included in the continuing operations in the accompanying condensed consolidated statements of income and comprehensive income through the date of disposition.

5. Investments in unconsolidated entities

As of March 31, 2016 and December 31, 2015, the Trust had investments in the following unconsolidated joint ventures (see Note 2), which are accounted for under the equity method:


•	a 50% interest in 1313 5th Street MN Holdings, LLC, a Delaware limited liability company, which owns the collegiate housing property referred to as The Marshall at the University of Minnesota;


•	a 50% interest in West Clayton Athens GA Owner, LLC, a Delaware limited liability company, which owns the collegiate housing property referred to as Georgia Heights at the University of Georgia;


•	a 25% interest in University Village-Greensboro LLC, a Delaware limited liability company, which owns the collegiate housing property referred to as University Village - Greensboro; and


•	a 14% interest in Elauwit Networks, a South Carolina limited liability company, which is a student housing technology services provider.

The Trust participates in major operating decisions of, but does not control, these entities; therefore, the equity method is used to account for these investments.

The following is a summary of the results of operations related to the unconsolidated joint ventures for the three months ended March 31, 2016 and 2015 (unaudited, in thousands):



Results of Operations of Unconsolidated Entities: For the three months ended March 31,	2016			2015
Revenues	$	7,415		$	8,517
Net income (loss)	$	14		$	(661	)
Equity in losses of unconsolidated entities	$	(244	)	$	(194	)

As of March 31, 2016 and December 31, 2015, the Trust had $27.4 million and $28.1 million, respectively, of investments in unconsolidated entities classified in other assets in the accompanying condensed consolidated balance sheets. As of March 31, 2016 and December 31, 2015, liabilities are recorded totaling $1.8 million and $2.0 million, respectively, related to investments in unconsolidated entities where distributions exceeded contributions and equity in earnings and the Trust has historically provided financial support; therefore, these investments are classified in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets (see Note 2).

6. Debt

Revolving credit facility

On November 19, 2014, the Operating Partnership entered into a Fifth Amended and Restated Credit Agreement (the “Fifth Amended Revolver”). The Fifth Amended Revolver amended and restated that certain Fourth Amended and Restated Credit Agreement (the "Fourth Amended Revolver"). The Fifth Amended Revolver has a maximum availability of $500.0 million and an accordion feature to $1.0 billion, which may be exercised during the first four years subject to satisfaction of certain conditions. The Fifth Amended Revolver is scheduled to mature on November 19, 2018 with a one-year extension option, provided that certain conditions are met.

EdR serves as the guarantor for any funds borrowed by the Operating Partnership under the Fifth Amended Revolver. The interest rate per annum applicable to the Fifth Amended Revolver is, at the Operating Partnership’s option, equal to a base rate or the LIBOR plus an applicable margin based upon our leverage. As of March 31, 2016, the interest rate applicable to the Fifth Amended Revolver was 1.68%. If amounts are drawn, due to the fact that the Fifth Amended Revolver bears interest at variable rates, cost approximates the fair value. In addition, the Operating Partnership also incurs an unused fee equal to either 0.15% or

0.25% of the unused balance, based on outstanding commitments. As of March 31, 2016, there was no outstanding balance under the Fifth Amended Revolver, thus, our remaining availability was $500.0 million.

The Fifth Amended Revolver contains customary affirmative and negative covenants and contains financial covenants that, among other things, require the maintenance of certain minimum ratios of EBITDA (earnings before payment or charges of interest, taxes, depreciation, amortization or extraordinary items) as compared to interest expense and total fixed charges. The financial covenants also include consolidated net worth and leverage ratio tests, and distributions are prohibited in excess of 95% of funds from operations ("FFO") except to comply with the legal requirements to maintain REIT status. As of March 31, 2016, the Operating Partnership was in compliance with all covenants of the Fifth Amended Revolver.

Unsecured term loan facility

On January 13, 2014, the Operating Partnership and certain subsidiaries entered into an unsecured term loan facility under a Credit Agreement (the "Credit Agreement"), which was subsequently amended and restated on November 19, 2014 (the "Amended and Restated Credit Agreement"). The Amended and Restated Credit Agreement removed certain subsidiaries as borrowers and amended certain financial covenants to align with the Fifth Amended Revolver.

Under the Amended and Restated Credit Agreement, the unsecured term loans have an aggregate principal amount of $187.5 million, consisting of a $122.5 million Tranche A term loan with a seven-year maturity (the “Tranche A Term Loan”) and a $65.0 million Tranche B term loan with a five-year maturity (the “Tranche B Term Loan” and, together with the Tranche A Term Loan, the “Term Loans”). The Tranche A Term Loan matures on January 13, 2021 and the Tranche B Term Loan matures on January 13, 2019. The Credit Agreement contains an accordion feature pursuant to which the Borrowers may request that the total aggregate amount of the Term Loans be increased to $250.0 million, which may be allocated to Tranche A or Tranche B, subject to certain conditions, including obtaining commitments from any one or more lenders to provide such additional commitments. The Operating Partnership used proceeds from the Term Loan to repay a portion of the outstanding balance under the Fourth Amended Revolver.

The interest rate per annum on the Tranche A Term Loan is, at the Operating Partnership’s option, equal to a base rate or LIBOR plus an applicable margin ranging from 155 to 225 basis points. The interest rate per annum on the Tranche B Term Loan is, at the Operating Partnership’s option, equal to a base rate or LIBOR plus an applicable margin ranging from 120 to 190 basis points. The applicable margin for the Term Loans is based on leverage. At March 31, 2016 and December 31, 2015, the outstanding balance under the Term Loans was $186.6 million and $186.5 million, respectively, which is presented net of

unamortized deferred financing costs of $0.9 million and $1.0 million, respectively, in the accompanying condensed consolidated balance sheets.

The Amended and Restated Credit Agreement contains customary affirmative and restrictive covenants substantially similar to those contained in the Fifth Amended Revolver. EdR serves as the guarantor for any funds borrowed under the Amended and Restated Credit Agreement. As of March 31, 2016, the Operating Partnership was in compliance with all covenants of the Credit Agreement.

In connection with entering into the Credit Agreement, the Operating Partnership entered into multiple interest rate swaps with notional amounts totaling $187.5 million to hedge the interest payments on the LIBOR-based Term Loans (see Note 10). As of March 31, 2016, the effective interest rate on the Tranche A Term Loan was 3.85% (weighted average swap rate of 2.30% plus the current margin of 1.55%) and the effective interest rate on the Tranche B Term Loan was 2.86% (weighted average swap rate of 1.66% plus the current margin of 1.20%).

Unsecured senior notes

On November 24, 2014, the Operating Partnership completed the public offering of $250.0 million aggregate principal amount of unsecured senior notes (the "Unsecured Senior Notes") under an existing shelf registration statement. The 10-year Unsecured Senior Notes were issued at 99.991% of par value with a coupon of 4.6% per annum and are fully and unconditionally guaranteed by EdR. Interest on the Unsecured Senior Notes is payable semi-annually on June 1 and December 1 of each year. The Unsecured Senior Notes will mature on December 1, 2024. At March 31, 2016 and December 31, 2015, the outstanding balance for both periods under the Unsecured Senior Notes was $247.7 million, which is presented net of unamortized deferred financing costs of $2.3 million in the accompanying condensed consolidated balance sheets. The terms of Unsecured Senior Notes contain certain covenants that restrict the ability of EdR and the Operating Partnership to incur additional secured and unsecured indebtedness. In addition, the Operating Partnership must maintain a minimum ratio of unencumbered asset value to unsecured debt, as well as a minimum interest coverage level. As of March 31, 2016, the Operating Partnership was in compliance with all covenants.

Mortgage and construction debt

As of March 31, 2016 and December 31, 2015, mortgage and construction notes payable consist of the following, which were secured by the underlying collegiate housing properties (amounts in thousands):



	Outstanding Balance at
Property	March 31, 2016			December 31, 2015			Interest Rate at March 31, 2016			Interest Rate Type	Initial Maturity Date
Master Secured Credit Facility	$	—		$	75,858		n/a

The Centre at Overton Park	—			22,351			n/a
University Towers	33,475			33,650			2.54	%		Variable	7/1/2016
Mortgage Debt	33,475			56,001			2.54	%	⁽¹⁾

The Retreat at Louisville	35,672			35,672			2.49	%		Variable	8/1/2017
The Oaks on the Square - Phase IV	27,744			27,553			2.44	%		Variable	10/20/2017
The Retreat at Blacksburg - Phase I	22,633			10,380			2.49	%		Variable	2/4/2019
Construction Loans	86,049			73,605			2.47	%	⁽¹⁾

Total mortgage and construction debt / weighted average rate	119,524			205,464			2.49	%	⁽¹⁾
Unamortized premium and deferred financing costs	(1,258		)	(953		)
Total net of unamortized premium and deferred financing costs	118,266			204,511
Less current portion	(33,475		)	(35,446		)
Total mortgage and construction debt, net of current portion	$	84,791		$	169,065

⁽¹⁾Represents the weighted average interest rate as of March 31, 2016.

Master Secured Credit Facility

The Operating Partnership had a credit facility with Fannie Mae (the "Master Secured Credit Facility") that was entered into on December 31, 2008 and expanded on December 2, 2009. All notes under the Master Secured Credit Facility contained cross-default provisions; all properties securing the notes were cross-collateralized.

In January 2016, the Operating Partnership prepaid in full the two remaining ten-year notes under the Master Secured Credit Facility with proceeds from the January 2016 follow-on equity offering (see Note 2). One of the prepaid notes had a principal balance of $21.3 million, was set to mature on January 1, 2020 and had a fixed interest rate of 5.67%. The second prepaid note had a principal balance of $54.5 million, was set to mature on January 1, 2019 and had a fixed interest rate of 6.02%. The Operating Partnership incurred a prepayment penalty of $9.3 million in connection with the prepayments. Concurrent with the repayment, the Master Secured Credit Facility was terminated and all encumbered properties were released as collateral.

Mortgage debt and construction loans

In January 2016, the Operating Partnership repaid in full the fixed-rate mortgage debt with a principal balance of $22.3 million

that was assumed in connection with the 2012 acquisition of The Centre at Overton Park. The interest rate was equal to 5.6%

and the mortgaged debt was scheduled to mature on January 1, 2017. A prepayment penalty of $1.0 million was incurred in

connection with the prepayment.

All mortgage and construction loans contain customary financial covenants, such as minimum debt service ratios. As of March 31, 2016, the Operating Partnership was in compliance with all covenants.

The following table reconciles the carrying amount of mortgage and construction notes payable, net of unamortized deferred

financing costs, for the three months ended March 31, 2016 and the year ended December 31, 2015 (in thousands):



	March 31, 2016			December 31, 2015
Balance, beginning of period	$	204,511		$	248,128
Additions to principal	12,444			65,491
Repayments of principal	(98,384		)	(108,179		)
Amortization of debt premium	(49		)	(843		)
Write-off of debt premium related to debt pay off	(523		)	(70		)
(Increase) decrease in deferred financing costs, net	267			(16		)
Balance, end of period	$	118,266		$	204,511

The scheduled maturities of outstanding indebtedness (excluding the Fifth Amended Revolver) as of March 31, 2016 are as follows (in thousands):



Year
2016 (nine months ending December 31, 2016)	$	33,475
2017	63,416
2018	—
2019	87,633
2020	—
2021	122,500
Thereafter	250,000
Total	557,024
Unamortized deferred financing costs	(4,434		)
Outstanding as of March 31, 2016, net of unamortized deferred financing costs	$	552,590

7. Commitments and contingencies

For its third-party development projects, the Trust commonly provides alternate housing and project cost guarantees, subject to certain conditions. Alternate housing guarantees generally require the university to provide on-campus housing or the Trust to provide substitute living quarters and transportation for students to and from the university if the project is not complete by an agreed-upon date. Under project cost guarantees, the Trust is responsible for the construction costs of a project in excess of an approved budget. The budget consists primarily of costs included in the general contractors’ guaranteed maximum price contract (“GMP”). In most cases, the GMP obligates the general contractor, subject to force majeure and approved change orders, to provide completion date guarantees and to cover cost overruns and liquidated damages. In addition, the GMP is typically secured with payment and performance bonds.

The Operating Partnership and various joint venture partners have jointly and severally guaranteed partial repayment on third-party mortgage and construction debt secured by the following underlying collegiate housing properties, all of which are unconsolidated joint ventures. The Operating Partnership is liable to the lender for any loss, damage, cost, expense, liability, claim or other obligation incurred by the lender arising out of or in connection with certain non-recourse exceptions in connection with the debt. Pursuant to the respective operating agreement, the joint venture partner agreed to indemnify, defend and hold harmless the Trust with respect to such obligations, except to the extent such obligations were caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates. Therefore, exposure under the guaranties for obligations not caused by the willful misconduct, gross negligence, fraud or bad faith of the Operating Partnership or its employees, agents or affiliates is not expected to exceed the Operating Partnership's proportionate interest in the related mortgage debt in the case of the non-recourse, carve-out guaranty, or in the Operating Partnership's proportionate interest in the partial repayment guaranty, as applicable.

The following summarizes the Operating Partnership's exposure under such guaranties (dollars in thousands):



			March 31, 2016						December 31, 2015
			Joint Venture Balance			Operating Partnership's Proportionate Interest			Joint Venture Balance			Operating Partnership's Proportionate Interest
	Ownership Percent		Loan Balance		Partial Repayment Guarantee	Loan Balance		Partial Repayment Guarantee	Loan Balance		Partial Repayment Guarantee	Loan Balance		Partial Repayment Guarantee
University Village - Greensboro	25	%	$	23,206	n/a	$	5,802	n/a	$	23,297	n/a	$	5,824	n/a
The Marshall	50	%	56,489		8,767	28,245		4,384	56,507		8,767	28,254		4,384
Georgia Heights	50	%	34,385		7,230	17,193		3,615	31,430		7,230	15,715		3,615

During October 2014, the Operating Partnership and LeylandAlliance LLC entered into a $38.0 million construction loan for the fourth phase of the The Oaks on the Square project (see Note 3). The Operating Partnership and LeylandAlliance LLC jointly committed to provide a guarantee of repayment for the construction loan. As of March 31, 2016, $34.0 million had been drawn on the construction loan, of which $6.3 million was attributable to LeylandAlliance LLC, and has not been included in our condensed consolidated financial statements.

As owners and operators of real estate, environmental laws impose ongoing compliance requirements on the Trust. The Trust is not aware of any environmental matters or liabilities with respect to the collegiate housing communities that would have a material adverse effect on the Trust’s condensed consolidated financial condition or results of operations.

We are not currently a party to, nor are any of our communities the subject of material pending legal proceedings. In the normal course of business, the Trust is subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of such matters, in management's opinion, the liabilities, if any, are not expected to have a material effect on our financial position, results of operations or liquidity.

Under the terms of the limited partnership agreement of University Towers Operating Partnership, LP, so long as the contributing owners of such property hold at least 25% of the University Towers Partnership Units, the Trust has agreed to maintain certain minimum amounts of debt on the property to avoid triggering gain to the contributing owners. If the Trust fails to do this, the Trust must repay the contributing owners the amount of taxes they incur.

After being awarded a development consulting contract, the Trust will enter into predevelopment consulting contracts with educational institutions to develop collegiate housing communities on their behalf. The Trust will enter into reimbursement agreements that provide for the Trust to be reimbursed for the predevelopment costs incurred prior to the institution’s governing body formally approving the final development contract. As of March 31, 2016 and December 31, 2015, the Trust had reimbursable predevelopment costs of $2.2 million and $1.9 million, respectively, which are reflected in other assets in the accompanying condensed consolidated balance sheets.

As described in Notes 3 and 14, the Trust has entered into binding agreements to acquire interests in four collegiate housing communities for an aggregate cash consideration of $258.0 million, which are expected to close at various times in 2016 and 2017, subject to customary closing conditions.

8. Noncontrolling interests

Operating Partnership

Joint Ventures: As of March 31, 2016, EROP had entered into four joint venture agreements to develop, own and manage the following collegiate housing communities: The Retreat at Louisville near The University of Louisville, The Retreat at Blacksburg near Virginia Polytechnic Institute and State University, The Local: Downtown near Texas State University and SkyVue near Michigan State University. All of these joint ventures are VIEs that met the criteria for consolidation (see Note 2).

EROP's joint venture partner's investments in The Retreat at Louisville, The Retreat at Blacksburg, The Local: Downtown and SkyVue joint ventures are accounted for as noncontrolling interests in the accompanying condensed consolidated balance sheets and statements of changes in partner's capital and noncontrolling interests and net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of income and comprehensive income.

As of December 31, 2015, EROP's joint venture partner's investment in 605 West met the requirements to be classified outside of permanent equity, and was therefore classified as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets and net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of income and comprehensive income due to the partner's ability to put their ownership interests to EROP as stipulated in the operating agreements. On March 11, 2016, EROP acquired the joint venture partner's interest and sold this property for a gross sales price of $54.6 million (see Note 4).

At December 31, 2015, EROP held a 95% ownership interest in the Roosevelt Point collegiate housing property serving Arizona State University: Downtown Phoenix Campus. In February 2016, EROP purchased the remaining 5% ownership interest in Roosevelt Point.

EROP also has a 72.7% investment in University Towers Operating Partnership, LP. This entity is considered a VIE that met the criteria for consolidation (see Note 2). The units of the limited partnership interest of University Towers Operating Partnership, LP (“University Towers Operating Partnership Units”) are also classified as noncontrolling interests. The University Towers Operating Partnership Units are redeemable at the option of the holder and they participate in net income and distributions. Accordingly, EROP has determined that the University Towers Operating Partnership Units meet the requirements to be classified outside of permanent equity, and are therefore also classified as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets. Income related to such units are recorded as net income attributable to noncontrolling interests in the accompanying condensed consolidated statements of income and comprehensive income. As of March 31, 2016, there were 69,086 University Towers Operating Partnership Units outstanding.

The following table sets forth activity with the redeemable noncontrolling interests for the three months ended March 31, 2016 and 2015 (in thousands):



	Three months ended March 31,
	2016			2015
Beginning balance	$	5,248		$	4,431
Net income	135			189
Contributions from redeemable noncontrolling interests	—			26
Adjustments to report redeemable noncontrolling interests at fair value	140			147
Purchase and return of equity to noncontrolling partner's interest	(2,910		)	—
Distributions	(51		)	(22		)
Ending balance	$	2,562		$	4,771

The value of redeemable noncontrolling interests is reported at the greater of fair value or historical cost at the end of each reporting period. As of March 31, 2016 and December 31, 2015, EROP reported the redeemable noncontrolling interests at fair value, which was greater than historical cost.

Redeemable Limited Partner Units: The OP Units that EROP is required, either by contract or securities law, to deliver registered shares of common stock of the Trust or cash, at the general partner's discretion, to the exchanging Operating Partnership unitholder is classified as redeemable limited partner units in the mezzanine section of the accompanying condensed consolidated balance sheets of the Operating Partnership. The redeemable limited partner units are reported at the greater of fair value or historical cost at the end of each reporting period. As of March 31, 2016 and December 31, 2015, EROP reported the redeemable limited partner units at fair value, which was greater than historical cost.

During the three months ended March 31, 2016 and 2015, 25,000 OP Units were redeemed in each period for 25,000 shares of the Trust's common stock. As of March 31, 2016 and December 31, 2015, there were 199,308 and 224,308 OP Units outstanding.

Below is a table summarizing the activity of redeemable limited partners' unit for the three months ended March 31, 2016 and 2015 (in thousands):



	Three months ended March 31,
	2016			2015
Beginning balance	$	8,312		$	10,081
Net income	58			40
Distributions	(149		)	(93		)
Reclassification of vested LTIP Units to redeemable limited partner	244			—
Conversion of redeemable limited partner units into common stock	(938		)	(960		)
Adjustments to report redeemable limited partner units at fair value	587			(191		)
Ending balance	$	8,114		$	8,877

The Trust

The Trust accounts for the joint ventures noted above as VIEs and consolidates such entities in the same manner as EROP. The noncontrolling interests of the Trust include the third-party equity interests in the joint venture properties at The Retreat at Louisville, The Retreat at Blacksburg, The Local: Downtown and SkyVue as discussed above, which are presented as a component of equity in the Trust’s accompanying condensed consolidated balance sheets. The Trust's equity interest in the joint venture property at Roosevelt Point is presented as a component of equity in the Trust’s accompanying condensed consolidated balance sheets at December 31, 2015.

The Trust’s redeemable noncontrolling interests include: (1) the redeemable limited partners presented in the accompanying condensed consolidated balance sheets of EROP; and (2) the University Towers Operating Partnership Units which are presented as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets of EROP. The redeemable noncontrolling interests are reported at the greater of fair value or historical cost at the end of each reporting period. As of March 31, 2016 and December 31, 2015, EROP reported the redeemable noncontrolling interests at fair value, which was greater than historical cost.

9. Incentive plans

On May 4, 2011, the Trust’s stockholders approved the Education Realty Trust, Inc. 2011 Omnibus Equity Incentive Plan (the "2011 Plan"). The purpose of the 2011 Plan is to promote the interests of the Trust and its stockholders by attracting, motivating and retaining talented executive officers, employees and directors of the Trust and linking their compensation to the long-term interests of the Trust and its stockholders. The 2011 Plan authorizes the grant of the 105,000 shares that remained available for grant under the previous plan, as well as 1,049,167 additional shares. As of March 31, 2016, the Trust had 520,612 shares of its common stock reserved for issuance pursuant to the 2011 Plan. Automatic increases in the number of shares available for issuance are not provided. The 2011 Plan provides for the grant of stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, other stock-based incentive awards to employees, directors and other key persons providing services to the Trust.

A restricted stock award is an award of the Trust’s common stock that is subject to restrictions on transferability and other restrictions as the Trust’s compensation committee determines in its sole discretion on the date of grant. The restrictions may lapse over a specified period of employment or the satisfaction of pre-established criteria as the compensation committee may determine. Except to the extent restricted under the award agreement, a participant awarded restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares. As of March 31, 2016 and December 31, 2015, unearned compensation related to restricted stock totaled $0.2 million for each period and will be recorded as expense over the applicable vesting period. The value is determined based on the market value of the Trust’s common stock on the grant date. During the three months ended March 31, 2016 and 2015, compensation expense of $0.1 million for each period was recognized in the accompanying condensed consolidated statements of income and comprehensive income, related to the vesting of restricted stock.

An RSU award is an award that will vest based upon the Trust’s achievement of total stockholder returns at specified levels as compared to the average total stockholder returns of a peer group of companies and/or the National Association of Real Estate Investment Trusts Equity Index over three years (the “Performance Period”). At the end of the Performance Period, the compensation committee of the Board will determine the level and the extent to which the performance goal was achieved. RSUs that satisfy the performance goal will be converted into fully-vested shares of the Trust’s common stock and the Trust will receive a tax deduction for the compensation expense at the time of vesting. Prior to vesting, the participants are not eligible to vote or receive dividends or distributions on the RSUs. As of March 31, 2016 and December 31, 2015, unearned compensation related to RSUs totaled $0.4 million and $0.6 million, respectively, and will be recorded as expense over the applicable vesting period. The value was determined using a Monte Carlo simulation technique. During the three months ended March 31, 2016 and 2015, compensation expense of $0.1 million and $0.2 million, respectively, was recognized in the accompanying condensed consolidated statements of income and comprehensive income, related to the vesting of RSUs. On January 1, 2016, 10,776 fully-vested shares of common stock were issued pursuant to the vesting of RSUs granted in 2013.

The Trust's 2015 Long-