Greystar CEO Bob Faith On EdR’s $4.6B Buyout

NEW YORK CITY–Yesterday Greystar announced it was acquiring Education Realty Trust for $4.6 billion. Greystar is making the purchase through a newly-formed perpetual-life fund called Greystar Student Housing Growth and Income Fund. As part of the deal, it is partnering with Blackstone Real Estate Income Trust to acquire 20 of EdR’s assets — namely, properties located close to several universities — for $1.2 billion. After the deal was announced GlobeSt.com caught up with Greystar CEO Bob Faith to learn more about the transaction and how it plays into Greystar’s plans to expand into student housing.

Like most mega deals lately, Greystar’s decision to take EdR private was fueled by current dynamics in the market — the gap between valuations in the public and private markets and private equity’s massive supply of dry capital, among others. “The acquisition does highlight the fact that sometimes you acquire assets on Wall Street more efficiently than on Main Street,” Faith says.

We touched on other topics as well, including:

The new fund that Greystar launched for student housing

We expect to continue to grow it. We’ll be focused on adding new assets, both on-campus and off-campus. More acquisitions are a possibility as is development.

We’re a very large investor in student housing outside of the US and we expect this fund to accelerate our US activities in this space. We’re a dominant player in the multifamily sector so this new fund is meant to help bring our student housing business up to scale, similar to our multifamily focus.

Off-campus versus on-campus student housing

A lot of EdR’s growth has been from its on-campus development and partnerships with universities. We think that represents a huge opportunity going forward. But there’s also the continued need for off-campus, purpose-built student housing and I would expect us to continue that as well.

The partnership with Blackstone

Greystar Student Housing Growth and Income Fund will be focused primarily on on-campus and close-to-campus housing. The deal with Blackstone was an opportunity to take some other really great assets at some great universities and capitalize them differently. They were all off-campus properties and just a little different than the cash-profile of our on-campus and close-to-campus assets.

Student housing’s role as a defensive stock

It is certainly something that made this acquisition even more exciting. These are low-leverage strategies so it introduces a safety factor. And the fact that student housing is not as volatile as other commercial real estate asset classes and performs pretty well in a downturn is definitely something that not just us but other capital providers around the globe find compelling.