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Monday, 25 June 2018

Greystar to Buy Education Realty Trust in $4.6Bln Deal

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Commercial Real Estate Direct Staff Report

Greystar Real Estate Partners has struck a deal to buy Education Realty Trust in an all-cash transaction valued at $4.6 billion.

The Charleston, S.C., investment manager, which had been in talks to buy the Memphis, Tenn., REIT, would pay $41.50/share in cash for every EdR share outstanding. That, it said, was 26.3 percent more than the shares' 90-day average, on a volume-weighted basis.

The agreement comes just less than a year after Greystar acquired Monogram Residential Trust Inc., an apartment REIT, in a deal valued at $4.4 billion. Like in that deal, the company formed a perpetual-life fund specifically to capitalize its investment. Greystar Student Housing Growth and Income Fund is the vehicle formed for its latest investment. The Monogram fund, Greystar Growth & Income Fund, is capitalized by GIC, Singapore's sovereign wealth fund, APG Asset Management of the Netherlands and Ivanhoe Cambridge of Canada.

In addition, Greystar has formed a venture with Blackstone Real Estate Income Trust Inc. that will pay $1.2 billion for 20 of EdR's properties with 10,500 beds. Blackstone, a non-traded REIT, holds a 95 percent stake in the venture. Greystar will manage the properties sold to the venture.

In total, EdR owns 79 student-housing properties with 42,300 beds serving 50 universities in 25 states. It was formed in 2004 as a successor to Allen & O'Hara Inc., a developer of student-housing properties, and went public a year later.

The REIT's portfolio generated $24.4 million of operating income on $90.7 million of revenue during the first quarter. And last year, it generated $63 million of operating income on $331.1 million of revenue.

The company carried $1.1 billion of debt on its balance sheet as of the end of last year, and carried its properties at a value of $3 billion.

The acquisition is slated to be completed by the end of the year and is not subject to financing contingencies - Greystar has received a financing commitment from JPMorgan Chase Bank - but it is subject to approval by EdR shareholders. It also faces termination if it's not completed by the end of the year.

The company's board has already given its okay. As part of the agreement, EdR has agreed not to solicit any competing offers. Nonetheless, if the company accepts another offer after July 25, it would face a termination fee of $118.1 million. If it accepts another offer before that date, it would face a $50.6 million kill fee.

If Greystar is unable to complete its acquisition, it would pay a $200 million fee to the REIT.

BofA Merrill Lynch is financial adviser to EdR, while Morrison & Foerster and Venable are legal advisers.

Greystar's financial adviser is JPMorgan Securities, while Hogan Lovells US and King & Spalding are legal advisers.

Blackstone's financial advisers, meanwhile, are Citigroup Global Markets Inc. and TSB Capital Advisors, while Simpson Thacher & Bartlett is legal adviser.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.



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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • Sector: Multifamily
  • Subject: Mergers & Acquisitions (M&A), REITS -general (REITS)
  • Valuation: More than $150 million
  • Private: No
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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