Greystar Adds to Its Student Housing, Forms Blackstone Venture

(Bloomberg) -- Greystar is betting even bigger on student housing.

A Greystar Real Estate Partners affiliate is buying EdR, one of the largest developers, owners and managers of U.S. student housing, for about $3.2 billion. With about $6 billion of student housing under management, Greystar is already the 10th-largest operator of such properties in the U.S., the third-biggest in the U.K. and the No. 1 operator in Spain.

“EdR has one of the highest-quality and best-located student-housing portfolios in the U.S.,” Bob Faith, Greystar’s founder and chief executive officer, said in a statement. “We believe in the long-term fundamentals supporting the sector and will continue to seek out opportunities to invest in student housing.”

Separately, a joint venture of Greystar and Blackstone Real Estate Income Trust Inc., a Blackstone Group LP affiliate, will acquire a portfolio of 20 EdR off-campus student-housing properties with 10,500 beds. The deal is worth $1.2 billion, according to Blackstone, which will lead the venture.

Global investment in the sector climbed to a record $16.4 billion in 2016 as more pension funds and insurers seek to acquire the assets. Earlier this year, a venture that includes Singapore sovereign wealth fund GIC Pte Ltd. and Canada Pension Plan Investment Board acquired about 22 student-housing properties for about $1 billion.

Greystar will pay $41.50 a share in cash for EdR, almost 14 percent more than its closing price on May 31, the last trading day before news reports of a possible deal surfaced, the firms said in the statement Monday. The transaction was unanimously approved by EdR’s board of directors and is expected to be completed in the second half of the year. The deal is worth about $4.6 billion when debt is included.

Shares of EdR, or Educational Realty Trust Inc., rose 1.5 percent to $41.46 at 9:44 a.m. in New York.

Property Growth

Greystar owns more than 435,000 conventional apartments and student units globally while EdR, a self-managed real estate investment trust, owns or manages 79 student-housing properties with with more than 42,300 beds at 50 universities in 25 U.S. states.

Given the joint-venture agreement with Blackstone, “we don’t expect other bidders to emerge for EdR despite the large amount of capital looking for a home in student housing,” Evercore ISI analysts Steve Sakwa, Samir Khanal and Jason Green said in a research note.

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