Greystar-led fund buys EDR for $4.6 bln; select assets sold to Blackstone (EDR)

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Last Update: 25-Jun-18 10:47 ET

In a deal which confirmed press reports from a few weeks ago, Education Realty Trust (EDR 41.43, +0.60, +1.5%) early this morning announced a deal whereby the company both entered into a definitive merger agreement to be acquired by a newly-formed, perpetual-life fund, Greystar Student Housing Growth and Income Fund, LP, an affiliate of Greystar Real Estate Partners, in an all-cash transaction valued at around $4.6 bln. EDR also signed an agreement with Blackstone’s (BX 32.11, -0.43, -1.3%) Real Estate Income Trust, Inc. whereby Blackstone would acquire the EdR Student Housing Portfolio with Greystar Real Estate Partners.

Greystar Deal

Education Realty announced this morning that it had entered into a definitive merger agreement to be acquired by Greystar Student Housing Growth and Income Fund, LP, an affiliate of Greystar Real Estate Partners, for about $4.6 bln in cash, including debt to be assumed or refinanced. Education Realty’s stockholders will receive $41.50 per share in cash. The deal is expected close in the second half of 2018 and is not contingent on receipt of financing by Greystar.

Under the Merger Agreement, Education Realty will discontinue its regular quarterly dividends. However, if the transaction is completed after October 15, 2018, Education Realty stockholders will receive a per diem amount of approximately $0.00435 per share for each day from October 15, 2018 until (but not including) the closing date.

Blackstone Deal

Blackstone Real Estate Income Trust, Inc. is planning to acquire the Education Realty Student Housing Portfolio. This is made up of 10,500 beds across 20 assets, for $1.2 bln, in a 95%/5% BREIT-led joint venture with Greystar Real Estate Partners. The transaction will be completed in conjunction with Greystar’s previously announced $4.6 bln acquisition of Education Realty.

The Portfolio has maintained occupancy rates of over 97% and includes student housing assets adjacent to top-tier universities that have demonstrated strong enrollment growth, such as University of California Berkeley, University of California Riverside, University of Virginia, University of Arizona, Arizona State University, University of Colorado Boulder and Penn State.

Proforma for this transaction, BREIT will own an around $10 bln portfolio of stabilized, income generating real estate concentrated in U.S. markets with attractive growth as well as real estate debt securities.

As a result of today's announcements, Education Realty does not expect to issue a second quarter earnings release or host a conference call and webcast to discuss its financial results for the quarter ended June 30, 2018.