Expenses of $1.8 million related to an internal audit committeeinvestigation and a special committee negatively impacted bothquarterly income and FFO. So far this year, the audit investigationand committee has cost the locally based military and studenthousing REIT $6.7 million.

As GlobeSt.compreviously reported, the investigation and formation of the specialcommittee began this March, prompted by an allegation of "tone atthe top" problems and "material weaknesses" in controls overfinancial reporting. The special committee is exploring strategicalternatives, including a sale of all or part of the company. GaryHolloway Sr., president, chairman and CEO, has said he would notbuy the company but was open to participation in a buyout.

During the third quarter, the student housing division had a netloss of $3.7 million on total revenues of $48.6 million, comparedwith a third-quarter 2005 loss of $1 million on revenues of $37.3million. Revenues from same-store student housing properties, thosein the portfolio for 12 months, were relatively unchanged, butsame-store operating expenses rose 16.6%. The increase wasattributed to higher utility, payroll, repair and maintenanceexpenses along with bad debt from uncollected rents.