EdR Funds $171M for Acquisitions and Developments - Analyst Blog

Memphis, TN-based, Education Realty Trust, Inc. (EDR) – commonly known as EdR –disclosed investments worth $171 million in acquisitions and developments at 3 major U.S. universities. The move comes as part of the company's effort to solidify its portfolio and expand its operating horizon. To fund this investment, the company reaped capital through a recent equity offering.

The investment specifically involved the acquisition of a collegiate housing community serving Arizona State University in Tempe. The two other investments were a cottage community next to the University of Louisville as well as the fourth phase of its Storrs Center/The Oaks on the Square development pedestrian to the University of Connecticut.

The Tempe property, known as The District on Apache is fully occupied and for the coming academic year, the property is 90% pre-leased. Notably, EdR agreed to acquire The District on Apache for around $92 million and aimed for first-year, unleveraged economic yield of 6.25% for this buyout. The company is on course for a closing in September.

For the Louisville project, EdR collaborated with Georgia-based Landmark Properties. The company will enjoy 75% stake and would manage the community following completion. The property is slated for delivery in 2015 and is anticipated to cost around $45 million, with EdR's share of about $33.8 million.

The third one is the fourth phase of its Storrs Center/The Oaks on the Square development. EdR will own and manage the $45 million residential development following its completion in summer 2015. Specifically, EdR would manage the residential part, The Oaks on The Square. The property would be next to the other 3 phases comprising 414 apartments in total and are fully pre-leased for the 2014-2015 leasing session.

Going forward, we expect such strategic investments in buyouts and development of properties placed in attractive markets to augment the company's operating platform and help in top-line expansion.

Education Realty Trust currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Spirit Realty Capital, Inc. (SRC), Equity LifeStyle Properties, Inc. (ELS) and UDR, Inc. (UDR). While Spirit Realty has a Zacks Rank #1 (Strong Buy), Equity LifeStyle and UDR carry a Zacks Rank #2 (Buy).

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