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EdR Grows on On-Campus Housing, Opens First Phase at NMU

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Education Realty Trust (EDR), commonly known as EdR, is making every effort to leverage on the soaring demand for on-campus development of universities. Recently, the company opened the first phase of its ONE Plan on-campus replacement housing at the Northern Michigan University (NMU).

This development, named The Woods in Marquette, MI, has 417 beds in a living-learning community. The property boasts ample amenities, including Internet and Wi-Fi, classrooms, study rooms, TV lounges and laundry facilities. The entire $75.4-million project is, however, slated for final delivery in 2018. The development will include 1,229 beds.

EdR is leasing the land from the university, and the project will be funded through EdR’s On Campus Equity Plan — The ONE Plan. The plan helps in funding projects on university land with this student housing REIT’s equity and financial flexibility. On the other hand, such partnerships allow the university to channelize its finances and organizational resources for other projects, and campus improvement measures.

Notably, student housing REITs have decent opportunities to excel over the long term, as demand has been shooting up for on-campus developments from universities which are battling state budget cuts and low funds, and are incapable of developing or renovating the ageing housing properties. Also, on-campus housing usually enjoys full occupancy, thus ensuring steady cash flow for the student housing REIT.

EdR is one of the largest developer, owner and manager of student housing communities in the nation. In 2017, the company is set to deliver third-party developments worth nearly $100 million, adding around $300 million to its own asset portfolio.

In sync with its efforts to capitalize on the growing demand for on-campus facilities, recently, EdR announced the completion and unveiling of Sycamore Suites, the new on-campus residence hall of East Stroudsburg University of Pennsylvania. The newly opened hall encloses two- and four-person suites, accommodating 496 beds. (Read more: Education Realty Completes Sycamore Suites Project)

Unlike residential REITs, including AvalonBay Communities, Inc. (AVB - Free Report) and Equity Residential (EQR - Free Report) , rental units of which are open for leasing to all, student housing REITs like EdR and American Campus Communities (ACC - Free Report) lease their real estates to students. Hence, such real estates are generally required to be set up within or in places close to colleges and universities. Also, enrolment growth is a major driver for student housing assets.

However, shares of the company have lost 9.4%, while the industry has recorded growth of 7.6%, year to date.

EdR currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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