Greystar-Led Fund to Acquire EdR for $4.6B

Blackstone also factored into the deal, forming a joint venture with GEdR to purchase approximately 10,500 beds across 20 assets for $1.2 billion.
Greystar CEO Bob Faith

Greystar Realty Partners’ Greystar Student Housing Growth and Income Fund LP (GEdR) has a deal in place to acquire Education Realty Trust (EdR) for $4.6 billion, including debt to be assumed or refinanced.

“We’ve been in the student housing business since 2008 when we acquired JPI, and the last five years or so, we’ve really dramatically grown our student housing business outside of the U.S., and while we continue to develop and do one-off joint ventures here in the U.S., we really hadn’t scaled up the opportunity,” Bob Faith, Greystar’s founder, chairman & CEO, told MHN. “What made EdR attractive to us was it’s an amazing company with great people and culturally compatible.”

Moreover, he said, it’s a portfolio that would be very hard-pressed to replicate by going around trying to acquire properties one by one or in smaller portfolios.

EdR’s total portfolio comprises nearly 45,000 beds serving 47 universities in 26 states. In March, it began construction for the first phase of College View, a 1,600-bed student housing community on the campus of Mississippi State University. 

According to Faith, the deal expands Greystar’s global student housing footprint significantly, and will seed the company’s newly formed flagship student housing-focused perpetual-life fund.

Blackstone’s Role

In a deal tied into this acquisition, Blackstone Real Estate Income Trust formed a joint venture with GEdR to acquire a portion of EDR’s portfolio, consisting of approximately 10,500 beds across 20 assets, for $1.2 billion.  

“It was a way to capitalize a very large transaction with two long-term capital sources that will keep the team together operating the assets,” Faith said.

The portfolio Blackstone is acquiring includes assets adjacent to top-tier universities, including the University of California Berkeley, University of California Riverside, University of Virginia, University of Arizona, Arizona State University, University of Colorado Boulder and Penn State.

“The transaction is consistent with BREIT’s strategy of acquiring high quality, income generating properties that have attractive long-term growth potential,” Frank Cohen, BREIT’s chairman & CEO, said in a prepared statement. “We are thrilled to acquire such a high-quality portfolio of student housing properties, concentrated in leading U.S. universities with growing enrollments, and we are thrilled to build on our long-standing relationship with Greystar.”

The average age of these 20 assets is eight years old and has consistently maintained occupancy rates over 97 percent. The Greystar/EdR team will continue to manage the assets.

The full transaction is expected to close in the second half of 2018, with BofA Merrill Lynch serving as exclusive financial advisor.

Morrison & Foerster LLP is advising EdR in the deal. The MoFo team consisted of Lauren Bellerjeau, corporate partner; David Slotkin, corporate partner and co-chair of the firm’s corporate finance and REIT practices; Justin Salon, corporate partner and co-chair of the firm’s REIT practice; and corporate associates John Hensley and Sherri Deckelboim.