Student housing developer, owner, and operator EdR announced today that it has entered into a definitive merger agreement to be acquired by a new perpetual-life fund, Greystar Student Housing Growth and Income Fund, LP, an affiliate of Greystar Real Estate Partners. The all-cash acquisition transaction is valued at approximately $4.6 billion, including debt to be assumed or refinanced.
All EdR stockholders will receive $41.50 per EdR share in cash under the terms of the merger agreement. This represents a 26.3% premium over the 90-day volume weighted average share price ending May 31 and a premium of 13.6% over the closing share price for the same day.
"For more than 50 years, EdR has been a pioneer in the student housing industry, partnering with some of America's most prestigious universities to enhance and transform their campus housing and achieve their student success goals," said Randy Churchey, EdR's CEO and chairman of the board of directors, in a statement. "As a public company, one of our priorities is to maximize stockholder value, and we believe this transaction with Greystar accomplishes that goal.”
The transaction is expected to close in the second half of 2018. EdR’s board of directors has approved the transaction, but it is still subject to a vote of approval from EdR’s stockholders, along with normal closing conditions.
EdR is set to discontinue its regular quarterly dividends. However, if the acquisition is closed after October 15, each stockholder will receive approximately $0.00435 per share for each day from October 15 until, but not including, the closing date. The company also does not expect to issue a second-quarter earnings release.
“We are certain today's announcement is in the best interest of all of EdR's stakeholders, including university partners, employees, and stockholders,” Churchey continued. “Since the current EdR management team took over on Jan. 1, 2010— and including this transaction—EdR stockholders will have received a total stockholder return of 293%, which ranks in the top quartile of all public U.S. equity REITs in existence during that time period."
In conjunction with this transaction, a Greystar affiliate and an affiliate of Blackstone Real Estate Income Trust will acquire a portfolio of off-campus student housing assets, which the combined Greystar/EdR team will continue to manage.
"We are pleased to partner with a group of world-class investors to acquire one of the nation's best student housing operators and developers. EdR has one of the highest-quality and best-located student housing portfolios in the U.S., and it will seed Greystar's newly formed, flagship student housing–focused perpetual-life fund. We are excited to capitalize on our significant scale and experience to enhance the platform's performance and value over the long term," added Bob Faith, founder, chairman, and CEO of Greystar.
“EdR's ONE Plan on-campus platform is an integral component that drove our interest, and we are excited about the continued on-campus growth opportunities it provides. Combined, we will leverage our expertise, vision, and financial strength to serve our current university partners as well as further expand our global student housing footprint," Faith said. "We believe in the long-term fundamentals supporting the sector and will continue to seek out opportunities to invest in student housing."
As of this date, EdR owns or manages 79 student housing communities encompassing more than 42,300 beds across 50 universities in 25 states. Greystar manages over 435,000 units and student beds in 150 markets across the world, including over $6 billion in student housing assets under management.