Expenses of $1.8 million related to an internal audit committee investigation and a special committee negatively impacted both quarterly income and FFO. So far this year, the audit investigation and committee has cost the locally based military and student housing REIT $6.7 million.

As GlobeSt.com previously reported, the investigation and formation of the special committee began this March, prompted by an allegation of "tone at the top" problems and "material weaknesses" in controls over financial reporting. The special committee is exploring strategic alternatives, including a sale of all or part of the company. Gary Holloway Sr., president, chairman and CEO, has said he would not buy the company but was open to participation in a buyout.

During the third quarter, the student housing division had a net loss of $3.7 million on total revenues of $48.6 million, compared with a third-quarter 2005 loss of $1 million on revenues of $37.3 million. Revenues from same-store student housing properties, those in the portfolio for 12 months, were relatively unchanged, but same-store operating expenses rose 16.6%. The increase was attributed to higher utility, payroll, repair and maintenance expenses along with bad debt from uncollected rents.