Market Overview

Did You Know There's A Student Housing REIT?

Did You Know There's A Student Housing REIT?

Education Realty Trust, Inc. (NYSE: EDR), a little-known company among investors, is a $3.4 billion student housing real estate investment trust (REIT). On Wednesday, Michael Bilerman of Citi Research initiated coverage of the stock with a Neutral rating and $46 price target.

According to Bilerman, the company does benefit from positive student housing trends, including favorable demographic and enrollment growth. The company also boasts a strong balance sheet and an "attractive" development pipeline. However, the analyst stated that since the stock has outperformed over the past year, its valuation is "generally fair" on a multiple and implied cap rate basis.

Education Realty Trust's stock has gained more than 20 percent since the start of 2016 and more than 60 percent over the past year.

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Specifically, the stock is trading at a premium to American Campus Communities, Inc. (NYSE: ACC), a $6.7 billion peer, in terms of 2017 adjusted funds from operations (AFFO) of 27x versus 24x. In addition, Education Realty Trust is trading at a premium in terms of multiple and implied cap rate compared to multifamily REITs.

The stock's already full valuation, coupled with a few near-term risks, including final preleasing results and the impact of 2017 supply, is keeping the analyst on the sidelines despite the existence of several catalysts for continued outperformance.

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Latest Ratings for EDR

Sep 2020CIBCUpgradesUnderperformerNeutral
Feb 2020BMO CapitalMaintainsMarket Perform
Nov 2019BMO CapitalMaintainsMarket Perform

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