Edgar Filing: Education Realty Trust, Inc.

Document

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, 2018



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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth 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
		Emerging growth 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
		Emerging growth company o

If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

Education Realty Trust, Inc. Yes o No x

Education Realty Operating Partnership, LP Yes o No x

As of May 1, 2018, Education Realty Trust, Inc. had 75,811,443 shares of common stock outstanding.

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended March 31, 2018 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 wholly-owned by EdR. As of March 31, 2018, 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 in 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 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, 2018

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, 2018 and December 31, 2017	1
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2018 and 2017	2
	Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2018 and 2017	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	5
Condensed Consolidated Financial Statements of Education Realty Operating Partnership, LP and Subsidiaries:
	Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017	7
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2018 and 2017	8
	Condensed Consolidated Statements of Changes in Partners' Capital and Noncontrolling Interests for the three months ended March 31, 2018 and 2017	10
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	11
Notes to Condensed Consolidated Financial Statements		13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		35
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		50
Item 4. Controls and Procedures.		50

PART II - OTHER INFORMATION
Item 1. Legal Proceedings.		51
Item 1A. Risk Factors.		51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		51
Item 3. Defaults Upon Senior Securities.		52
Item 4. Mine Safety Disclosures.		52
Item 5. Other Information.		52
Item 6. Exhibits.		52
Signatures.		55

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, 2018		December 31, 2017
Assets:
Collegiate housing properties, net	$	2,348,125	$	2,424,304
Collegiate housing properties — held for sale, net	25,818		—
Assets under development	585,640		488,614
Cash and cash equivalents	22,902		24,787
Restricted cash	4,491		4,368
Other assets	77,015		73,091
Total assets	$	3,063,991	$	3,015,164

Liabilities:
Unsecured debt, net of unamortized deferred financing costs	$	976,589	$	933,449
Accounts payable and accrued expenses	152,879		162,434
Deferred revenue	22,510		20,473
Total liabilities	1,151,978		1,116,356

Commitments and contingencies (see Note 7)	—		—

Redeemable noncontrolling interests	54,411		52,843

Equity:
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 75,808,889 and 75,779,932 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively	757		757
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, no shares issued and outstanding	—		—
Additional paid-in capital	1,842,688		1,844,639
Retained earnings	11,369		—
Accumulated other comprehensive income (loss)	1,615		(660		)
Total Education Realty Trust, Inc. stockholders’ equity	1,856,429		1,844,736
Noncontrolling interests	1,173		1,229
Total equity	1,857,602		1,845,965
Total liabilities and equity	$	3,063,991	$	3,015,164

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,
	2018			2017
Revenues:
Collegiate housing leasing revenue	$	87,749		$	80,785
Third-party development consulting services	—			1,815
Third-party management services	905			945
Operating expense reimbursements	2,074			2,253
Total revenues	90,728			85,798
Operating expenses:
Collegiate housing leasing operations	32,174			28,877
Development and management services	2,851			2,901
General and administrative	2,919			3,427
Depreciation and amortization	22,507			25,839
Ground lease expense	3,788			3,560
Other operating expense	—			500
Reimbursable operating expenses	2,074			2,253
Total operating expenses	66,313			67,357

Operating income	24,415			18,441

Nonoperating expenses (income):
Interest expense, net of amounts capitalized	4,751			3,028
Amortization of deferred financing costs	363			421
Interest income	(43		)	(32		)
Loss on extinguishment of debt	—			22
Total nonoperating expenses	5,071			3,439
Income before equity in (losses) earnings of unconsolidated entities, income taxes and gain on sale of collegiate housing properties	19,344			15,002
Equity in (losses) earnings of unconsolidated entities	(58		)	255
Income before income taxes and gain on sale of collegiate housing properties	19,286			15,257
Income tax expense (benefit)	66			(885		)
Income before gain on sale of collegiate housing properties	19,220			16,142
Gain on sale of collegiate housing properties	21,358			—
Net income	40,578			16,142
Less: Net loss attributable to the noncontrolling interests	(380		)	(15		)
Net income attributable to Education Realty Trust, Inc.	$	40,958		$	16,157

See accompanying notes to the condensed consolidated financial statements.



	Three months ended March 31,
	2018			2017
Comprehensive income:
Net income	$	40,578		$	16,142
Other comprehensive income:
Gain on cash flow hedging derivatives	2,275			1,078
Comprehensive income	42,853			17,220
Less: Comprehensive loss attributable to the noncontrolling interests	(380		)	(15		)
Comprehensive income attributable to Education Realty Trust, Inc.	$	43,233		$	17,235

Earnings per share information:
Net income attributable to Education Realty Trust, Inc. common stockholders per share – basic and diluted	$	0.53		$	0.21

Distributions per share of common stock	$	0.39		$	0.38

Weighted average common shares outstanding:
Weighted average common shares outstanding – basic	76,214			73,510
Weighted average common shares outstanding – diluted	76,385			73,775

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			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
	Shares		Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
Balance, December 31, 2016	73,075,455		$	731	$	1,802,852		$	—		$	(3,564	)	$	1,422		$	1,801,441
Proceeds from issuance of common stock, net of offering costs	108,353		1		596			—			—			—			597
Amortization of long-term incentive plan awards	6		—		776			—			—			—			776
Surrender of shares to cover taxes on vesting of restricted stock	(3,283	)	—		(2,564		)	—			—			—			(2,564		)
Cash dividends	—		—		(11,660		)	(16,157		)	—			—			(27,817		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—		—		238			—			—			—			238
Accretion of redeemable noncontrolling interests	—		—		(483		)	—			—			—			(483		)
Comprehensive income (loss)	—		—		—			16,157			1,078			(23		)	17,212
Balance, March 31, 2017	73,180,531		$	732	$	1,789,755		$	—		$	(2,486	)	$	1,399		$	1,789,400


Balance, December 31, 2017	75,779,932		$	757	$	1,844,639		$	—		$	(660	)	$	1,229		$	1,845,965
Proceeds from issuance of common stock, net of offering costs	28,957		—		1,139			—			—			—			1,139
Reclassification of vested LTIP Units to redeemable noncontrolling interest	—		—		(2,856		)	—			—			—			(2,856		)
Amortization of long-term incentive plan awards	—		—		532			—			—			—			532
Cash dividends	—		—		—			(29,589		)	—			—			(29,589		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—		—		(42		)	—			—			—			(42		)
Accretion of redeemable noncontrolling interests	—		—		(724		)	—			—			—			(724		)
Comprehensive income (loss)	—		—		—			40,958			2,275			(56		)	43,177
Balance, March 31, 2018	75,808,889		$	757	$	1,842,688		$	11,369		$	1,615		$	1,173		$	1,857,602

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,
	2018			2017
Operating activities:
Net income	$	40,578		$	16,142
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	22,507			25,839
Deferred tax expense	66			725
Excess tax benefit related to the vesting of restricted stock	—			(1,610		)
Loss on disposal of assets	116			—
Gain on sale of collegiate housing properties	(21,358		)	—
Noncash rent expense related to the straight-line adjustment for long-term ground leases	1,170			1,175
Loss on extinguishment of debt	—			22
Amortization of deferred financing costs	363			421
Distributions of earnings from unconsolidated entities	601			177
Noncash compensation expense related to stock-based incentive awards	711			938
Equity in (earnings) losses of unconsolidated entities	58			(255		)
Noncash adjustment of contingent consideration liability	—			500
Change in operating assets and liabilities	(13,850		)	1,541
Net cash provided by operating activities (net of acquisitions)	30,962			45,615

Investing activities:
Property acquisitions	—			(127,647		)
Purchase of corporate assets	(502		)	(316		)
Investment in collegiate housing properties	(3,512		)	(2,861		)
Proceeds from sale of collegiate housing properties	78,548			—
Earnest money deposits	—			(510		)
Investment in assets under development	(123,251		)	(97,358		)
Reimbursement of development related costs	6,659			—
Distributions from unconsolidated entities	25			103
Net cash used in investing activities	(42,033		)	(228,589		)

See accompanying notes to the condensed consolidated financial statements.



	Three months ended March 31,
	2018			2017
Financing activities:
Payment of mortgage and construction loans	—			(32,950		)
Borrowings under construction loans	—			146
Debt issuance costs	(3,480		)	(493		)
Borrowings on line of credit	75,000			240,000
Repayments of line of credit	(32,000		)	—
Payment of offering costs	—			(70		)
Contributions from noncontrolling interests	—			7,131
Dividends and distributions paid to common and restricted stockholders	(29,589		)	(27,817		)
Dividends and distributions paid to noncontrolling interests	(622		)	(87		)
Repurchases of common stock for payments of restricted stock tax withholding	—			(2,563		)
Net cash provided by financing activities	9,309			183,297
Net (decrease) increase in cash and cash equivalents and restricted cash	(1,762		)	323
Cash and cash equivalents and restricted cash, beginning of period	29,155			42,313
Cash and cash equivalents and restricted cash, end of period	$	27,393		$	42,636

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	22,902		$	34,922
Restricted cash	4,491			7,714
Total cash and cash equivalents and restricted cash	$	27,393		$	42,636

Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized	$	3,526		$	—
Income taxes paid	$	—		$	1

Supplemental disclosure of noncash activities:
Redemption of redeemable noncontrolling interests from unit holder to shares of common stock	$	1,031		$	1,138
Capital expenditures in accounts payable and accrued expenses related to developments	$	77,238		$	46,218

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, 2018		December 31, 2017
Assets:
Collegiate housing properties, net	$	2,348,125	$	2,424,304
Collegiate housing properties – held for sale	25,818		—
Assets under development	585,640		488,614
Cash and cash equivalents	22,902		24,787
Restricted cash	4,491		4,368
Other assets	77,015		73,091
Total assets	$	3,063,991	$	3,015,164

Liabilities:
Unsecured debt, net of unamortized deferred financing costs	$	976,589	$	933,449
Accounts payable and accrued expenses	152,879		162,434
Deferred revenue	22,510		20,473
Total liabilities	1,151,978		1,116,356

Commitments and contingencies (see Note 7)	—		—

Redeemable limited partner units	5,629		4,353

Redeemable noncontrolling interests	48,782		48,490

Partners' capital:
General partner - 6,920 units outstanding as of March 31, 2018 and December 31, 2017	178		177
Limited partners - 75,801,969 and 75,773,012 units issued and outstanding as of March 31, 2018 and December 31, 2017, respectively	1,854,636		1,845,219
Accumulated other comprehensive income (loss)	1,615		(660		)
Total partners' capital	1,856,429		1,844,736
Noncontrolling interests	1,173		1,229
Total capital	1,857,602		1,845,965
Total liabilities and partners' capital	$	3,063,991	$	3,015,164

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,
	2018			2017
Revenues:
Collegiate housing leasing revenue	$	87,749		$	80,785
Third-party development consulting services	—			1,815
Third-party management services	905			945
Operating expense reimbursements	2,074			2,253
Total revenues	90,728			85,798
Operating expenses:
Collegiate housing leasing operations	32,174			28,877
Development and management services	2,851			2,901
General and administrative	2,919			3,427
Depreciation and amortization	22,507			25,839
Ground lease expense	3,788			3,560
Other operating expense	—			500
Reimbursable operating expenses	2,074			2,253
Total operating expenses	66,313			67,357

Operating income	24,415			18,441

Nonoperating expenses (income):
Interest expense, net of amounts capitalized	4,751			3,028
Amortization of deferred financing costs	363			421
Interest income	(43		)	(32		)
Loss on extinguishment of debt	—			22
Total nonoperating expenses	5,071			3,439
Income before equity in (losses) earnings of unconsolidated entities, income taxes and gain on sale of collegiate housing properties	19,344			15,002
Equity in (losses) earnings of unconsolidated entities	(58		)	255
Income before income taxes and gain on sale of collegiate housing properties	19,286			15,257
Income tax expense (benefit)	66			(885		)
Income before gain on sale of collegiate housing properties	19,220			16,142
Gain on sale of collegiate housing properties	21,358			—
Net income	40,578			16,142
Less: Net loss attributable to the noncontrolling interests	(436		)	(50		)
Net income attributable to Education Realty Operating Partnership L.P.	$	41,014		$	16,192

See accompanying notes to the condensed consolidated financial statements.



	Three months ended March 31,
	2018			2017
Comprehensive income:
Net income	$	40,578		$	16,142
Other comprehensive income:
Gain on cash flow hedging derivatives	2,275			1,078
Comprehensive income	42,853			17,220
Less: Comprehensive loss attributable to the noncontrolling interests	(436		)	(50		)
Comprehensive income attributable to unitholders	$	43,289		$	17,270

Earnings per unit information:
Net income attributable to unitholders – basic and diluted	$	0.53		$	0.21

Distributions per unit	$	0.39		$	0.38

Weighted average units outstanding:
Weighted average units outstanding – basic	76,414			73,664
Weighted average units outstanding – diluted	76,483			73,775

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 Income (Loss)			Noncontrolling Interests			Total
	Units	Amount			Units		Amount			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
Balance, December 31, 2016	6,920	$	178		73,068,535		$	1,803,405		$	(3,564	)	$	1,422		$	1,801,441
Issuance of units in exchange for contributions of equity offering proceeds and redemption of units	—	—			108,353		597			—			—			597
Amortization of long-term incentive plan awards	—	—			6		776			—			—			776
Surrender of shares to cover taxes on vesting of restricted shares	—	—			(3,283	)	(2,564		)	—			—			(2,564		)
Distributions	—	(3		)	—		(27,814		)	—			—			(27,817		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—			—		238			—			—			238
Accretion of redeemable noncontrolling interests	—	—			—		(483		)	—			—			(483		)
Comprehensive income (loss)	—	2			—		16,155			1,078			(23		)	17,212
Balance, March 31, 2017	6,920	$	177		73,173,611		$	1,790,310		$	(2,486	)	$	1,399		$	1,789,400


Balance, December 31, 2017	6,920	$	177		75,773,012		$	1,845,219		$	(660	)	$	1,229		$	1,845,965
Issuance of units in exchange for contributions of equity offering proceeds and redemption of units	—	—			28,957		1,139			—			—			1,139
Reclassification of vested LTIP Units to redeemable noncontrolling interest	—	—			—		(2,856		)	—			—			(2,856		)
Amortization of long-term incentive plan awards	—	—			—		532			—			—			532
Distributions	—	(3		)	—		(29,586		)	—			—			(29,589		)
Adjustments to reflect redeemable noncontrolling interests at fair value	—	—			—		(42		)	—			—			(42		)
Accretion of redeemable noncontrolling interests	—	—			—		(724		)	—			—			(724		)
Comprehensive income (loss)	—	4			—		40,954			2,275			(56		)	43,177
Balance, March 31, 2018	6,920	$	178		75,801,969		$	1,854,636		$	1,615		$	1,173		$	1,857,602

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,
	2018			2017
Operating activities:
Net income	$	40,578		$	16,142
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	22,507			25,839
Deferred tax expense	66			725
Excess tax benefit related to the vesting of restricted stock	—			(1,610		)
Loss on disposal of assets	116			—
Gain on sale of collegiate housing properties	(21,358		)	—
Noncash rent expense related to the straight-line adjustment for long-term ground leases	1,170			1,175
Loss on extinguishment of debt	—			22
Amortization of deferred financing costs	363			421
Distributions of earnings from unconsolidated entities	601			177
Noncash compensation expense related to stock-based incentive awards	711			938
Equity in (losses) earnings of unconsolidated entities	58			(255		)
Noncash adjustment of contingent consideration liability	—			500
Change in operating assets and liabilities	(13,850		)	1,541
Net cash provided by operating activities (net of acquisitions)	30,962			45,615

Investing activities:
Property acquisitions	—			(127,647		)
Purchase of corporate assets	(502		)	(316		)
Investment in collegiate housing properties	(3,512		)	(2,861		)
Proceeds from sale of collegiate housing properties	78,548			—
Earnest money deposits	—			(510		)
Investment in assets under development	(123,251		)	(97,358		)
Reimbursement of development related costs	6,659			—
Distributions from unconsolidated entities	25			103
Net cash used in investing activities	(42,033		)	(228,589		)

Financing activities:
Payment of mortgage and construction loans	—			(32,950		)
Borrowings under construction loans	—			146
Debt issuance costs	(3,480		)	(493		)
Borrowings on line of credit	75,000			240,000
Repayments of line of credit	(32,000		)	—
Payment of offering costs	—			(70		)
Contributions from noncontrolling interests	—			7,131
Distributions paid on unvested restricted stock and long-term incentive plan awards	(179		)	(116		)
Distributions paid to unitholders	(29,410		)	(27,701		)

See accompanying notes to the condensed consolidated financial statements.



	Three months ended March 31,
	2018			2017
Distributions paid to noncontrolling interests	(622		)	(87		)
Repurchases of units for payments of restricted stock tax withholding	—			(2,563		)
Net cash provided by financing activities	9,309			183,297
Net increase (decrease) in cash and cash equivalents and restricted cash	(1,762		)	323
Cash and cash equivalents and restricted cash, beginning of period	29,155			42,313
Cash and cash equivalents and restricted cash, end of period	$	27,393		$	42,636

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	22,902		$	34,922
Restricted cash	4,491			7,714
Total cash and cash equivalents and restricted cash	$	27,393		$	42,636

Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized	$	3,526		$	—
Income taxes paid	$	—		$	1

Supplemental disclosure of noncash activities:
Redemption of redeemable noncontrolling interests from unit holder to shares of common stock	$	1,031		$	1,138
Capital expenditures in accounts payable and accrued expenses related to developments	$	77,238		$	46,218

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 REIT that is publicly traded on the New York Stock Exchange under the ticker symbol "EDR". Under the Articles of Incorporation, as amended, restated and supplemented, 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 wholly-owned by EdR. As of March 31, 2018, 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 its taxable REIT subsidiaries ("TRS"), EDR Management Inc. (the “Management Company”), a Delaware corporation that performs collegiate housing management activities. EDR Development LLC (the “Development Company”), a Delaware limited liability company and wholly-owned subsidiary of the Management Company, which provides 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

The Trust accounts for interests in partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the variable interest entity (“VIE”) guidance. 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.

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 and the Operating Partnership'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 and the Operating Partnership's consolidated financial statements and related notes included in the Trust's Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (the "SEC") on February 27, 2018.

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.

Restricted cash

Restricted cash includes (i) escrow accounts held by lenders for the purpose of paying taxes and insurance and funding capital improvements, (ii) certain security deposits received from tenants and (iii) retainage held by financial institutions.

During the three months ended December 31, 2017, the Trust early adopted Accounting Standards Update ("ASU") 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows, and transfers between cash and cash equivalents and restricted cash are no longer presented within the statement of cash flows.

As a result of the adoption of ASU 2016-18, cash flows related to restricted cash within the investing section of the statement of cash flows have been retrospectively adjusted for the three months ended March 31, 2017, as follows (dollars in thousands):



	As Previously Reported			As Adjusted per ASU 2016-18			Effect of Change
Three months ended March 31, 2017:
Investing activities:
Restricted cash	$	124		$	—		$	(124	)
Net cash used in investing activities	(228,465		)	(228,589		)	(124		)

Net change in cash and cash equivalents and restricted cash	$	447		$	323		$	(124	)
Cash and cash equivalents and restricted cash, beginning of year	34,475			42,313			7,838
Cash and cash equivalents and restricted cash, three months ended March 31, 2017	$	34,922		$	42,636		$	7,714

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 cost of the total debt and capitalizes 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 related to the aquisition of real estate properties are capitalized if they are not deemed to be business combinations.

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, 2018 and 2017, 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 dispositions during the three months ended March 31, 2018 did not qualify for treatment as discontinued operations and, as a result, the operations of the properties are included in continuing operations in the accompanying condensed consolidated statements of income and comprehensive income through the date of disposition.

During August 2016, the Trust committed and finalized plans to demolish and redevelop Players Club, an off-campus community that serves Florida State University. Depreciation estimates were revised to reflect the shortened remaining useful life. The Trust recorded $1.7 million of accelerated depreciation during the three months ended March 31, 2017 related to the change in estimate. The impact on net income attributable to EdR common stockholders per share - basic and diluted for the three months ended March 31, 2017 was $0.02. The community is still under development at March 31, 2018.

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

The Trust follows the guidance issued by the Financial Accounting Standards Board ("FASB") regarding the classification and measurement of redeemable securities. The Trust classifies redeemable noncontrolling interests, which include redeemable interests in consolidated joint ventures with puts exercisable by the joint venture partners 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.

The Trust also has certain noncontrolling interests with put options at substantially fixed prices. These noncontrolling interests are accounted for as noncontrolling interests redeemable at other than fair value. The Trust accounts for the change in redemption value through the use of an accretion model from the date of inception to the expected redemption date. Changes in redemption value are recorded in equity, either through retained earnings or additional paid-in capital (absent any retained earnings). The impact of the changes in redemption value (accretion) is included in earnings per share using the two-class method.

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 with puts exercisable by the joint venture partners and units of limited partnership interest in University Towers Operating Partnership, LP are classified as redeemable noncontrolling interests. The redeemable noncontrolling interests / 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 or redemption value 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 statements 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.

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, 2018 and December 31, 2017. The Trust and its subsidiaries file federal and state income tax returns. As of March 31, 2018, open tax years generally included tax years for 2014, 2015, 2016 and 2017. The Trust’s policy is to include interest and penalties related to unrecognized tax benefits in general and administrative expenses. For the three months ended March 31, 2018 and 2017, the Trust had no interest or penalties recorded related to unrecognized tax benefits.

Goodwill and other intangible assets

Goodwill is tested annually at the reporting unit level for impairment as of December 31 and is tested for impairment more frequently if events and circumstances indicate that 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, 2018. The carrying value of goodwill was $3.1 million as of March 31, 2018 and December 31, 2017, 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 of collegiate housing properties. As of March 31, 2018 and December 31, 2017, gross in-place leases totaled $12.2 million for each period and are being amortized over the estimated life of the remaining lease term, which is less than one year for student housing leases. Amortization expense totaled $34.8 thousand and $3.4 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017, accumulated amortization totaled $11.1 million for each period. The unamortized residential in-place leases were fully amortized at December 31, 2017. The carrying value of other intangible assets related to commercial in-place leases was $1.2 million at both March 31, 2018 and December 31, 2017.

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).

Revenue recognition

The Trust recognizes revenue related to leasing activities at the collegiate housing communities owned by the Trust, management fees related to managing third-party collegiate housing communities, development consulting fees related to the general oversight of third-party collegiate housing development and operating expense reimbursements for payroll and related expenses incurred for third-party collegiate housing communities managed by the Trust.

Collegiate housing leasing revenue — Collegiate housing leasing revenue is comprised of all activities related to leasing and operating the collegiate housing communities and includes predominantly lease and lease-related revenues accounted for under Accounting Standards Codification ("ASC") 840. These lease and lease-related revenues include leasing apartments by the bed, food services and providing certain ancillary services. Students are required to execute lease contracts with payment schedules that vary from semester to monthly payments. Generally, the Trust requires each executed leasing contract to be accompanied by a signed parental guarantee. Receivables are recorded when billed. Revenues and nonrefundable application and service fees are recognized on a straight-line basis over the term of the lease contracts.

Deferred revenue related to collegiate housing revenue consists primarily of prepaid rent and deferred straight line rent revenue and totaled $22.5 million and $20.5 million at March 31, 2018 and December 31, 2017, respectively.

Third-party development services revenue — Third-party development services represent a single performance obligation for the delivery of a completed collegiate housing property. Third-party development fees generally represent 3% to 5% of the total cost of a project and are estimated and stipulated in the contract subject to adjustment for changes in the total cost of the project. Management has determined that the development fee and construction oversight fee outlined in the contract represent variable consideration, and the transaction price should be estimated based on the most likely amount, which will generally be the amount set forth in the contract for such fees. The Trust recognizes the development fee and construction oversight fee based on the percentage of the total project completed to date as control of the work in process transfers to the owner as construction is performed. In addition, some development consulting contracts include a provision whereby the Trust can participate in project savings resulting from successful cost management efforts and earn an additional development fee. Management believes that the additional development fee also represents variable consideration and should be estimated based on the expected value method subject to the constraint for factors outside the entity's control that could result in a significant reversal of previously recognized revenue. Variable consideration related to the additional development fee is reassessed each quarter to determine whether the uncertainties associated with such fee are sufficiently resolved to produce an estimate of the expected value that would not be probable of resulting in a significant reversal of previously recognized revenue. During the three months ended March 31, 2017, there was $0.6 million of additional fees related to cost-savings included in third-party development services revenue, and no development fees were unearned during the three months ended March 31, 2018 and 2017. At March 31, 2018 and December 31, 2017, there was no unearned revenue from customers relating to development consulting services.

Third-party management services revenue — Third-party management services typically cover all aspects of community operations, including residence life and student development, marketing, leasing administration, strategic relationships, information systems and accounting services. These services represent a single performance obligation to operate the community on behalf of the owner. These services are provided pursuant to multi-year management agreements under which management fees are typically 3% to 5% of leasing revenue. As the management fees vary based on the property revenues, the fees represent variable consideration. Revenues are recognized over time as the services are provided. Each monthly service period represents a distinct obligation, and revenue is recognized based on the expected value of the contractual percentage of actual revenues. Payment is typically received in the month following completion of the monthly service period.

Operating expense reimbursements — As part of the development agreements, there are certain costs the Trust pays on behalf of universities or third-party owners and investors. These costs are included in reimbursable operating expenses and are required to be reimbursed to the Trust by the universities or third-party owners and investors. The Trust also has certain payroll and related expenses as part of our management agreements that we pay on behalf of the property owners. These costs are included in reimbursable operating expenses and are also required to be reimbursed to the Trust by the property owners. The Trust acts as the principal in all of these activities as the expenses are incurred in connection with our third-party development and management services. The expense and revenue related to these reimbursements are recognized and paid when incurred and service is provided.

Earnings per share

Earnings per Share - The Trust

Basic earnings per share is calculated by dividing net income available to common stockholders after accretion of certain redeemable noncontrolling interests 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 and the shares issuable upon settlement of the Forward Agreements (see Note 9) using the treasury stock method. 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. When noncontrolling interests are redeemable at other than fair value, increases or decreases in the carrying amount of the redeemable noncontrolling interests are reflected in earnings per share using the two-class method.

Earnings per OP Unit - EROP

Basic earnings per unit is calculated by dividing net income available to unitholders after accretion of certain redeemable noncontrolling interests by the weighted average number of units of limited partnership interest in the Operating Partnership ("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 and the shares issuable upon settlement of the Forward Agreements using the treasury stock method. EROP follows the authoritative guidance regarding the determination of whether certain instruments are participating securities.

Recent accounting pronouncements

In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities" ("ASU 2017-12"). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. The Trust early adopted ASU 2017-12 as of January 1, 2018. ASU 2017-12 required the Trust to recognize the cumulative effect of initially applying ASU 2017-12 as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of 2018. The adoption had no impact on the accompanying condensed consolidated financial statements other than enhanced disclosures.

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, on a modified retrospective basis. The Trust's primary revenue is collegiate housing lease and lease-related revenue; as such, the Trust is a lessor on a significant number of leases. The Trust is continuing to evaluate the potential impact of the ASU and believes it will continue to account for its leases in substantially the same manner due to the short-term nature (less than 12 months) of the leases. The most significant change anticipated relates to ground lease agreements, which could result in recording the right-of-use asset and related liability on the balance sheet. The Trust plans to adopt ASU 2016-02 effective January 1, 2019 and is continuing to evaluate and quantify the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

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 became effective for annual reporting periods beginning after December 15, 2017 and interim periods within those years and permits the use of either a full retrospective method or a modified retrospective method. The standard also allows the use of certain practical expedients described below. Early adoption was permitted for annual reporting periods beginning after December 15, 2016. Since the issuance of ASU 2014-09, the FASB has issued ASU 2016-08, which 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 FASB also issued ASU 2016-12 to provide further implementation guidance in some areas and add practical expedients. The effective dates of these amendments are the same as ASU 2014-09. The Trust adopted the new revenue standard using the modified retrospective approach as of January 1, 2018, and has completed its assessment of its revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition under the new standard. The adoption of this standard did not have an impact on the consolidated financial statements on the date of adoption, as a substantial portion (approximately 90%) of revenue consists of lease and lease-related income from leasing arrangements, which is specifically excluded from ASU 2014-09. The Trust's other non-lease related revenue streams, which have been evaluated under ASU 2014-09 and related guidance, include but are not limited to third-party development services, third-party management services and operating expense reimbursements. The Trust utilized the practical expedient to recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of retained earnings only for contracts that are not completed at January 1, 2018. There was no impact to opening retained earnings related to adopting the guidance because there were no third-party development consulting agreements outstanding at December 31, 2017. Based on management's analysis of the Trust’s non-lease related revenue streams, the primary impact of the new revenue standard is enhanced disclosures that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors, and there was no material impact to our consolidated results of operations for the adoption of the standard for the three months ended March 31, 2018. As the Trust utilized the modified retrospective approach, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Prior to adoption of ASU 2014-09, gains for real estate sales transactions were recognized and then reduced by exposure to loss related to any continuing involvement at the time of sale. Upon adoption of ASU 2014-09, any continuing involvement must be analyzed as a separate performance obligation in the contract and a portion of the sales price allocated to each performance obligation. When the continuing involvement performance obligation is satisfied, the sales price allocated to it will be recognized. The Trust had no sales of real estate with continuing involvement during the first quarter of 2018 or in any prior periods that would require cumulative adjustment as of January 1, 2018.

3. Acquisition and development of real estate investments

Acquisition of collegiate housing properties

2017 Acquisitions

During the year ended December 31, 2017, the Trust completed the following two collegiate housing property acquisitions, which were determined to be asset acquisitions:



Name	Primary University Served	Acquisition Date	# of Beds	# of Units	Contract Price (in thousands)
Retreat at Corvallis	Oregon State University, Oregon	January 2017	1,016	330	$	99,450
319 Bragg	Auburn University, Alabama	February 2017	305	86	$	28,500

Below is the allocation of the purchase price as of the date of acquisition (in thousands):



	Retreat at Corvallis			319 Bragg			Total
Collegiate housing property	$	95,785		$	27,475		$	123,260
In-place leases	3,780			1,055			4,835
Other assets	617			2			619
Current liabilities	(936		)	(131		)	(1,067		)
Total net assets acquired	$	99,246		$	28,401		$	127,647

The $0.3 million difference between the aggregate contracted price of $128.0 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.

Development of collegiate housing properties

During 2017, the Trust completed the development of, and placed in service, the following communities which opened for the 2017/2018 lease year. The costs incurred represent the balance capitalized in collegiate housing properties, net as of December 31, 2017 (dollars in thousands):



Name	Primary University Served	Bed Count	Costs Incurred as of December 31, 2017		Internal Development Costs Capitalized		Interest Costs Capitalized
Name	Primary University Served	Bed Count	Costs Incurred as of December 31, 2017		Three months ended March 31, 2017
University Flats	University of Kentucky	771	$	75,241	$	8	$	638
Sawtooth Hall	Boise State University	656	35,350		56		217
Lewis Hall	University of Kentucky	346	26,325		108		173
SkyVue	Michigan State University	824	87,142		39		655
The Local: Downtown	Texas State University	304	31,131		31		161
The Woods - Phase I	Northern Michigan University	417	25,742		78		146
Total		3,318	$	280,931	$	320	$	1,990

In January 2018, the Trust completed the development of and placed into service the second phase of The Woods, a collegiate housing property with total project cost of $26.5 million consisting of 433 beds and 121 units serving Northern Michigan University.

The following represents a summary of active developments as of March 31, 2018, including internal development costs and interest costs capitalized during the three months ended March 31, 2018 and 2017 (dollars in thousands):



Name	Primary University Served	Costs Incurred as of March 31, 2018		Internal Development Costs Capitalized		Interest Costs Capitalized		Internal Development Costs Capitalized		Interest Costs Capitalized
Name	Primary University Served	Costs Incurred as of March 31, 2018		Three months ended March 31, 2018				Three months ended March 31, 2017
One on 4th	Oklahoma State University	$	40,390	$	40	$	309	$	37	$	205
Maplewood	Cornell University	46,123		66		291		124		32
The Woods - Phase III	Northern Michigan University	15,437		72		186		—		—
One on Centre	University of Pittsburgh	84,164		56		582		25		178
Players Club Redevelopment	Florida State University	26,164		41		163		13		10
Hale Mahana	University of Hawai'i	82,528		58		578		39		262
Hub at Minneapolis	University of Minnesota	78,302		34		431		18		20
Union at Tempe	Arizona State University	136,841		66		988		58		260
Union on Lincoln Way	Iowa State University	34,294		41		206		38		10
Union on Plum	Colorado State University	20,246		52		120		22		22
SouthSide Commons	Lehigh University	3,090		72		11		—		—
College View	Mississippi State University	2,860		76		4		—		—
Undeveloped land		15,201		107		139		—		—
Total active projects under development		$	585,640	$	781	$	4,008	$	374	$	999

As of March 31, 2018, the Trust is contractually obligated to fund remaining amounts under guaranteed maximum price contracts with the general contractor of approximately $220.7 million to complete these developments.

4. Disposition of real estate investments

During the three months ended March 31, 2018, the Trust sold the communities set forth in the table below for an aggregate selling price of $81.4 million. The Trust received combined net proceeds of approximately $78.5 million after deducting closing costs and recognized a $21.4 million gain on these dispositions.



Name	Primary University Served	Disposition Date	# of Beds	# of Units
Campus Lodge	University of Florida	February 2018	1,115	360
River Pointe	University of West Georgia	February 2018	504	132
Carrollton Crossing	University of West Georgia	February 2018	336	84

The net income attributable to all disposed properties is included in continuing operations in the accompanying condensed consolidated statements of income and comprehensive income through the date of disposition.

In April 2018, the Trust sold Commons on Bridge and The Commons at Knoxville, two collegiate housing communities serving the University of Tennessee, for an aggregate selling price of $47.8 million. The Trust received combined net proceeds of approximately $46.5 million after deducting closing costs and anticipates recognizing an approximate $21.2 million gain on these dispositions. These properties were classified as held for sale on the accompanying condensed consolidated balance sheet as of March 31, 2018, and no depreciation was recorded after the properties met the held-for-sale criteria. At March 31, 2018, the combined other assets and other liabilities are $0.5 million and $0.6 million, respectively, related to these asset groups.

5. Investments in unconsolidated entities

As of March 31, 2018 and December 31, 2017, the Trust had investments in the following unconsolidated joint ventures (see Note 2), all of 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.

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, 2018 and 2017 (unaudited, in thousands):



Results of Operations of Unconsolidated Entities: For the three months ended March 31,	2018			2017
Revenues	$	9,382		$	5,609
Net income (loss) ⁽¹⁾	$	(158	)	$	455
Equity in earnings (losses) of unconsolidated entities	$	(58	)	$	255

⁽¹⁾ Net income for the periods presented above equals income from continuing operations.

As of March 31, 2018 and December 31, 2017, the Trust had $22.5 million and $23.2 million, respectively, of investments in unconsolidated entities classified in other assets in the accompanying condensed consolidated balance sheets. As of March 31, 2018 and December 31, 2017, liabilities are recorded totaling $2.1 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).

In April 2018, the Trust sold its investment in the University Village — Greensboro collegiate housing community and received net proceeds of $3.7 million after deducting closing costs.

6. Debt

As of March 31, 2018 and December 31, 2017, the Trust had the following debt outstanding:



	March 31, 2018			December 31, 2017
Unsecured indebtedness:
Revolving credit facility	392,000			349,000
Unsecured term loan facility	187,500			187,500
Unsecured senior notes	250,000			250,000
Unsecured private placement notes	150,000			150,000
Total	979,500			936,500
Less: Unamortized deferred financing costs	(2,911		)	(3,051		)
Total outstanding debt, net of unamortized deferred financing costs	$	976,589		$	933,449

Revolving credit facility

On February 16, 2018, the Operating Partnership entered into a Sixth Amended and Restated Credit Agreement (the “Revolver”), which amended and restated the previous revolving credit facility that was scheduled to mature in November 2018. The Revolver has a maximum availability of $600.0 million and an accordion feature to $1.0 billion, which may be exercised during the term, subject to satisfaction of certain conditions. The Revolver is scheduled to mature on February 16, 2023. Debt issuance costs of $3.5 million were incurred in connection with the amendment and these costs, along with the previous unamortized costs, are being amortized over the new term.

EdR serves as the guarantor for any funds borrowed by the Operating Partnership under the Revolver. The interest rate per annum applicable to the Revolver is, at the Operating Partnership’s option, equal to a base rate or the London InterBank Offered Rate ("LIBOR") plus an applicable margin based upon our leverage. As of March 31, 2018, the interest rate applicable to the Revolver was 2.74%. If amounts are drawn, due to the fact that the Revolver bears interest at variable rates, cost approximates the fair value. As of March 31, 2018, the Trust's remaining availability was $208.0 million.

The 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 and certain leverage ratio tests. The covenants also permit distributions, provided that the Operating Partnership is not in default. As of March 31, 2018, the Operating Partnership was in compliance with all covenants of the Revolver.

Unsecured term loan facility

On February 16, 2018, the Operating Partnership and certain subsidiaries entered into the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement was amended to, among other things, modify the financial covenants to reflect the changes made to the financial covenants of the Revolver pursuant to the Sixth Amended and Restated Credit Amendment. Under the Second 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 (the “Tranche A Term Loan”) and a $65.0 million Tranche B term loan (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 18, 2022. The Second Amended and Restated 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 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 120 to 190 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, 2018 and December 31, 2017,

the aggregate 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 Second Amended and Restated Credit Agreement contains customary affirmative and restrictive covenants substantially similar to those contained in the Revolver. EdR serves as the guarantor for any funds borrowed under the Second Amended and Restated Credit Agreement. As of March 31, 2018, the Operating Partnership was in compliance with all covenants.

In connection with entering into the First Amended and Restated Credit Agreement on November 19, 2014, which was superseded by the Second Amended and Restated Credit Agreement as subsequently amended, 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 11) through the Term Loans' initial maturity date.

The Operating Partnership also entered into forward starting interest rate swaps (see Note 11) concurrently with executing the Second Amended and Restated Credit Agreement, which extended the term of the Tranche B Term Loan by three years to January 18, 2022.

As of March 31, 2018, the effective interest rate on the Tranche A Term Loan was 3.50% (weighted average swap rate of 2.30% plus the current margin of 1.20%) 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 notes payable

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, 2018 and December 31, 2017, the outstanding balance under the Unsecured Senior Notes was $248.3 million and $248.2 million, respectively, which is presented net of unamortized deferred financing costs of $1.7 million and $1.8 million, respectively, 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, 2018, the Operating Partnership was in compliance with all covenants.

Unsecured private placement notes

On August 31, 2017, the Operating Partnership issued $150.0 million aggregate principal amount of unsecured notes in a private placement. The private placement notes were issued in two tranches with $75.0 million bearing interest at 4.22% and due August 31, 2029 (the “Senior A Notes”), and $75.0 million bearing interest at 4.30% and due August 31, 2032 (the “Senior B Notes” and, together with the Senior A Notes, the “Notes”). The Notes are guaranteed by EdR. Net proceeds from issuance of the Notes were used to repay a portion of the outstanding balance on the Revolver. At March 31, 2018 and December 31, 2017, the outstanding principal balance on the Notes was $149.7 million, which is presented net of unamortized deferred financing costs of $0.3 million.

The Notes contain customary affirmative and restrictive covenants substantially similar to those in the Revolver and Second Amended and Restated Credit Agreement. Additionally, the Notes contain cross-default provisions if the Operating Partnership defaults on other indebtedness exceeding a threshold of $35.0 million. As of March 31, 2018, the Operating Partnership was in compliance with all covenants.

The scheduled maturities of outstanding indebtedness as of March 31, 2018 are as follows (in thousands):



Year
2018 (nine months ending December 31, 2018)	$	—
2019	—
2020	—
2021	122,500
2022	65,000
2023	392,000
Thereafter	400,000
Total	979,500
Unamortized deferred financing costs	(2,911		)
Outstanding as of March 31, 2018, net of unamortized deferred financing costs	$	976,589

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 can be 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 agreements, the joint venture partners 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 are 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, 2018						December 31, 2017
			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⁽¹⁾	25	%	$	22,441	n/a	$	5,610	n/a	$	22,546	n/a	$	5,637	n/a
The Marshall	50	%	54,736		8,767	27,368		4,384	54,956		8,767	27,478		4,384
Georgia Heights	50	%	34,661		7,230	17,331		3,615	34,796		7,230	17,398		3,615

⁽¹⁾ In April 2018, the Trust sold its investment in the University Village - Greensboro collegiate housing community and the debt was repaid (See Note 5). No guarantees remain.

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.

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 the Trust's financial position, results of operations or liquidity.

8. Noncontrolling interests

Operating Partnership

Joint Ventures: As of March 31, 2018, EROP had entered into 11 joint venture agreements to develop, own and manage certain collegiate housing communities. Seven of the developments are still under construction at March 31, 2018. All of these joint ventures are VIEs that meet the criteria for consolidation (see Note 2).

EROP's joint venture partners' investments in all but one of the communities under development met the requirements to be classified outside of permanent equity and are 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 partners' ability to put their ownership interests to EROP for cash based on fair value or at substantially fixed exercise prices as stipulated in the operating agreements.

In connection with the acquisition of Urbane in 2016, the Trust, through a joint venture, acquired a controlling interest in the legal entity owning the collegiate housing property. At March 31, 2018 and December 31, 2017, the Trust had a 97.0% partnership interest in Urbane. The partner's remaining ownership interests in Urbane is accounted for as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets due to the partner's ability to further put its remaining ownership interests to the Operating Partnership for cash based on fair value. The share in net income (loss) attributable to noncontrolling interests is recorded in the accompanying condensed consolidated statements of income and comprehensive income.

The value of the joint venture partners' investments in the development projects and acquired properties redeemable at fair value are reported at the greater of fair value or historical cost at the end of each reporting period. At March 31, 2018 and December 31, 2017, the joint venture partners' investments in properties under development were recorded at historical cost, as the carrying value approximates fair value. At March 31, 2018 and December 31, 2017, the Trust's joint venture partners' investments in completed developments were recorded at fair value, which exceeded carrying value. At March 31, 2018 and December 31, 2017, the joint venture partners' interest in the acquired properties was recorded at fair value.

The joint venture partners’ investments in development projects redeemable at substantially fixed prices are considered redeemable at other than fair value. The accretion recorded during the three months ended March 31, 2018 and 2017 were $0.7 million and $0.5 million, respectively. The change in redemption value during the three months ended March 31, 2018 is reflected in additional paid-in capital and is also included in the calculation of earnings per share using the two-class method.

EROP also owns a 72.7% interest in University Towers Operating Partnership, LP. This entity is considered a VIE that meets 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 is recorded as net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of income and comprehensive income. As of March 31, 2018 and December 31, 2017, there were 69,086 University Towers Operating Partnership Units outstanding. The value of redeemable University Towers Operating Partnership Units is reported at the greater of fair value or historical cost at the end of each reporting period. As of March 31, 2018 and December 31, 2017, EROP reported the redeemable noncontrolling interests at fair value, which was greater than historical cost.

The following table sets forth activity with the redeemable noncontrolling interests for the three months ended March 31, 2018 and 2017 (in thousands):



	Three months ended March 31,
	2018			2017
Beginning balance	$	48,490		$	32,160
Net loss	(380		)	(27		)
Contributions from redeemable noncontrolling interests	—			7,131
Adjustments to report redeemable noncontrolling interests at fair value	172			(137		)
Distributions	(224		)	(25		)
Accretion of redeemable noncontrolling interests	724			483
Ending balance	$	48,782		$	39,585

Redeemable Limited Partner Units: The OP Units and vested LTIP Units that may be tendered for redemption by the holders thereof for cash or, at EdR's option, for shares of EdR common stock are 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, 2018 and December 31, 2017, EROP reported the redeemable limited partner units at fair value (considered Level 2 as determined based on the market price of the Trust's common stock), which was greater than historical cost.

During the three months ended March 31, 2018 and 2017, 25,000 and 27,500 OP Units were redeemed for 25,000 and 27,500 shares of EdR's common stock, respectively. As of March 31, 2018 and December 31, 2017, there were 80,198 and 105,198 OP Units outstanding, respectively, other than OP Units held by EdR. Also at March 31, 2018 and December 31, 2017, 100,055 and 21,452, respectively, of vested LTIP Units from the 2015, 2016 and 2017 LTIP Plans (see Note 10) were included in redeemable limited partner units in the mezzanine section of the accompanying condensed consolidated balance sheets of the Operating Partnership.

Below is a table summarizing the activity of redeemable limited partner units for the three months ended March 31, 2018 and 2017 (in thousands):



	Three months ended March 31,
	2018			2017
Beginning balance	$	4,353		$	6,789
Net income	56			35
Distributions	(398		)	(61		)
Reclassification of vested LTIP Units to redeemable limited partner units	2,856			522
Conversion of redeemable partner units in exchange for common stock or redemption for cash	(1,109		)	(1,138		)
Adjustments to report redeemable limited partner units at fair value	(129		)	(101		)
Ending balance	$	5,629		$	6,046

The Trust

The Trust accounts for the joint ventures discussed above as VIEs and consolidates such entities in the same manner as EROP. The noncontrolling interests of the Trust include third-party equity interests in one joint venture development which is presented as a component of permanent equity in the Trust’s accompanying condensed consolidated balance sheets.

The Trust’s redeemable noncontrolling interests include: (1) the redeemable limited partners presented in the accompanying condensed consolidated balance sheets of EROP; (2) the University Towers Operating Partnership Units; (3) our partners' investments in certain joint venture developments; and (4) our partners' investments in certain acquired communities, which are presented as redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets of EROP.

9. Equity

Stockholders’ Equity - The Trust

On August 1, 2016 and February 28, 2017, the Trust entered into equity distribution agreements to establish new at-the-market equity offering programs ("ATM Programs") under which the Trust is authorized to sell a maximum of $300.0 million and $500.0 million, respectively, in shares of EdR common stock. The ATM Programs implemented on August 1, 2016 and February 28, 2017 are referred to as the "2016 ATM Program" and "2017 ATM Program," respectively. Under these equity distribution agreements, EdR may make sales of common stock through at-the-market transactions or pursuant to forward sales agreements (the “Forward Agreements”) with certain counterparties. In connection with any Forward Agreement, the relevant forward purchaser will borrow from third parties and, through the relevant sales agent, sell a number of shares of EdR common stock underlying the particular Forward Agreement. The Trust does not initially receive any proceeds from any sale of borrowed shares.

At March 31, 2018, a summary of the outstanding shares subject to Forward Agreements is set forth in the table below (shares in thousands):



Date of Forward Agreement	Shares Sold	Volume Weighted Average Sale Price Per Share		Initial Forward Price⁽¹⁾		Final Settlement Date⁽²⁾
August 29, 2016	1,990	$	42.39	$	42.82	December 31, 2018	⁽³⁾
October 3, 2016	2,408	41.00		40.51		December 31, 2018	⁽³⁾
February 28, 2017	361	41.55		41.14		December 31, 2018
	4,759	$	41.62	$	41.55

⁽¹⁾ The initial forward price under each Forward Agreement is equal to 99.00% of the volume weighted average price at which the shares of EdR common stock are sold by the applicable forward seller as adjusted to reflect changes in the federal funds rate and to account for dividends paid to holders of EdR common stock. The initial forward prices presented in this table are for illustrative purposes only as the actual amount of proceeds per share to be received by the Trust upon settlement will be determined on the applicable settlement date based on adjustments made to the initial forward price to reflect the then-current federal funds rate and the amount of dividends paid to holders of EdR common stock over the term of the Forward Agreement.

⁽²⁾Represents the final date on which shares sold under each Forward Agreement may be settled.

⁽³⁾During 2017, the final date on which shares sold under the Forward Agreements may be settled was amended from December 29, 2017 to December 31, 2018.

During 2017, the Trust had fully settled three Forward Agreements by delivering 2.6 million shares of newly issued common stock and receiving $110.0 million of net proceeds, which were used to repay a portion of the outstanding balance on the Revolver and for general corporate purposes. These settlements exhausted the remaining availability under the 2016 ATM Program. As of March 31, 2018, the Trust had approximately $485.0 million available for issuance under its 2017 ATM Program.