EDR Divests Non-Core Assets

Education Realty Trust Inc. (EDR - Snapshot Report), a real estate investment trust (REIT) that owns, develops, and operates collegiate housing properties across the U.S., has recently sold two non-core assets for total net cash proceeds of $27.8 million. The asset sale was part of the long-term strategy of the company to generate cash for working capital needs by liquidating non-strategic assets.

The company sold Clayton Place – an 854-bed apartment community serving Clayton College and State University in Morrow, Georgia, for $20.5 million. The property was purchased by CSU Foundation Real Estate II, LLC, which had leased it from Education Realty since February 1, 2011 and subsequently acquired it under a lease-purchase agreement. Education Realty also sold a 336-bed Collegiate Village in Macon, Georgia to Macon State College Foundation Real Estate, LLC for $7.5 million.

At the same time, Education Realty celebrated the ground-breaking ceremony to mark the commencement of construction work on Storrs Center, a mixed-use town center project adjacent to the University of Connecticut. The project has been built under a joint venture with LeylandAlliance LLC – a leading real estate developer. Storrs Center would include new retail, restaurant, office and residential units within a planned community of pedestrian walkways, green spaces and conservation areas.

Education Realty would own and manage 290 apartments in Storrs Center, while the retail and commercial space spanning approximately 70,000 square feet would be developed and operated by LeylandAlliance LLC. The apartments are adjacent to the university campus, with adequate parking options for residents.

The first two phases of the mixed-use project would include the residential apartment units, each of which will feature a private laundry, wood floors, granite countertops, and stainless steel appliances besides other upscale amenities. The residential development is expected to serve the pent-up demand for housing facilities for graduate students, staff, and alumni of the university.

Education Realty is one of the leading REITs in the U.S., with an expertise in university town housing. We maintain our ‘Neutral’ recommendation on Education Realty, which currently has a Zacks #3 rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for American Campus Communities Inc. (ACC - Snapshot Report), a competitor of Education Realty.

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