Education Realty Trust, Inc. (EDR)

Q1 2010 Earnings Call Transcript

April 22, 2010 5:00 pm ET

Executives

Brad Cohen -- IR, ICR

Randy Churchey -- President and CEO

Randy Brown -- EVP, CFO, Treasurer and Secretary

Tom Trubiana -- SVP and Chief Investment Officer

Analysts

Michael Levy -- Macquarie

Paula Poskon -- Robert W. Baird

Karin Ford -- KeyBanc

Michelle Ko -- Bank of America-Merrill Lynch

Presentation

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Education Realty Trust First Quarter 2010 Earnings Conference Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator instructions) This conference is being recorded today, Thursday, April 22, 2010.

I would now like to turn the conference over to Mr. Brad Cohen with ICR. Please go ahead, sir.

Brad Cohen

Thank you. Good afternoon. During today's call management may make forward-looking statements. These statements are based upon current views and expectations. Such statements are subject to risks, uncertainties and other factors that could cause the actual results to differ materially from future results. Risk factors relating to the Company's results and management statements are detailed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

Forward-looking statements refer only to expectations as of the date on which they are made. Education Realty Trust assumes no obligation to update or revise such statements as a result of new information, future developments or otherwise.

It is now my pleasure to turn the call over to Randy Churchey, President and Chief Executive Officer. Randy?

Randy Churchey

Good afternoon. Thank you for joining us for the Education Realty Trust First Quarter 2010 Earnings Call. I’m joined by our Chief Financial Officer, Randy Brown, and by our Chief Investment Officer, Tom Trubiana. I hope you had an opportunity to review our press release.

Our first quarter 2010 adjusted FFO per share of $0.14 is consistent with our expectations. Randy Brown will discuss our first quarter results and full year outlook shortly.

I’m generally pleased with our results during the first quarter. We would stay focused on making progress each quarter as we work through the year. In some areas, our progress will be more immediate, and in others, it will take more time to show tangible results.

Our team is simultaneously focused on operating our current portfolio to maximize net operating income, signing new leases for the fall of 2010 term, evaluating our portfolio of capital recycling opportunities, working our industry relationship for new business opportunities, and continuing to conduct intensive reviews of the Company’s business processes.

First, I will speak the property operations. We made reasonable stride in restructuring property operations while still maintaining positive fall 2010 pre-leasing momentum. As part of this process we previously announced leadership changes and some restructuring. For example, we realigned the capital expenditures process through our construction personnel.

This change and other changes that will be made should enable our regional managers and our community managers to focus on their top three priorities, pleasing our customers, generating increases and net operating income, and preleasing for the fall 2010 term.

In addition, we have improved our daily preleasing monitoring report and we will roll out new property level Web site for all loan properties by May 1 st. We believe these two along with the other changes we have made will help us proactively manage our leasing activity and attract additional leasing traffic.

As we mentioned in our previous call, many of these changes will not have a substantial impact to the fall 2010 term given that many of these efforts commenced when we are already over 30% preleased. However, we do expect these initiatives to result and improve fall 2011 leasing.

We will be implementing additional initiatives throughout the year so that as we start focusing on fall 2011 leasing these initiatives will be in place and will help enhance the performance of our community.

Next, preleasing. We are in the middle of the fall 2010 leasing term. Due to the differences in school calendars and various universities we currently have signed leases for 100% of our inventory for next fall at some universities while at others we have signed leases for less than 20% of our inventory.

Our same-community preleasing occupancy for the fall 2010 term has increased to 52%, which is 1.2 percentage points ahead of last year at this time. Specifically, the Legacy community signed leases for about 2.3 percentage points behind last year and the Place community signed leases are about 6 percentage points ahead of this time last year.

Same-community net rental rate are approximately 1% ahead relative to last year. As I mentioned this data is based on only 52% preleasing for the fall 2010. Therefore, we do not suggest extrapolations to this data for the full fall 2010 leasing season.

We understand that sentiment and early reads on leasing and other sectors of multifamily are starting to see a turn. But as we previously communicated for our leasing our cycle is truly long, we’re only able to have an impact on the following years results, not the current year’s results.

A few comments about two of our newer communities which are now included as same communities in our fall 2010 preleasing data -- Syracuse and Southern Illinois. Our community at Syracuse opened in August 2009. As you may remember this is an on-campus development owned by EDR under our ONE Plan.

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