Education Realty Trust Expands Student Housing Portfolio

Educational Realty Trust has acquired three student housing properties variously in Texas, Indiana and Colorado, one of which it will greatly expand with adjacent new development.

Memphis, Tenn.—Educational Realty Trust Inc. (ERT) has acquired three student housing properties variously in Texas, Indiana and Colorado, one of which it will greatly expand with adjacent new development. Separately, the Memphis, Tenn.-based company also reports that it has closed a public offering of more than 14.3 million shares of common stock.

The largest of the recent acquisitions is the 244-unit, 644-bed GrandMarc at Westberry Place, a residential property on the Texas Christian University campus in Fort Worth, for which the REIT paid $54.7 million, representing a 6.8 percent cap rate. The property, subject to a 53-year ground lease with TCU, will be purchased with cash on hand and the assumption of a $37.1 million variable-interest rate mortgage.

Built in 2006, GrandMarc at Westberry Place includes one-, two-, three- and four-bedroom units and a 625-space parking structure. According to ERT, the property is 97.8 percent leased for the 2011-2012 academic year and has an average monthly rental rate of $842 per bed. On the ground floor is roughly 30,000 square feet of retail, which is fully leased to a variety of shops, restaurants and TCU.

In Indiana, EDR purchased Irish Row—a collegiate housing property adjacent to the University of Notre Dame in South Bend—for $27.5 million in cash, representing a 6 percent cap rate. The property, built in 2009 and 2011, consists of 326 beds in 127 units in a variety of two-, three-, and four-bedroom units. The average monthly rental rate at Irish Row is $726 per bed, and the community is currently fully leased for the academic year.

The company also will purchase the Lotus Center, a housing property adjacent to the University of Colorado-Boulder, for $6 million, funded with cash on hand. The Lotus Center, located on 2.5 acres, was originally built in 1960 but extensively renovated in 2008. Currently 100 percent occupied, the property consists of 40 beds within nine units, with an average monthly rental rate of $750 per bed. ERD plans to expand the property in the near future by building a $19.7 million, 199-bed addition in 2012 for a summer 2013 opening.

Like many major REITs, EDR is using its cash on hand and ability to raise more cash for the expansion of its portfolio, which is currently 60 properties, with nearly 34,500 beds in about 11,000 units. In early November, ERT increased its war chest by closing on a public offering of more than 14.3 million shares of its common stock. The company received about $124.4 million in net proceeds from the offering.