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EDR Purchases Asset in Arizona

Zacks Equity Research

Education Realty Trust, Inc (EDR), a real estate investment trust (:REIT), recently acquired a collegiate housing community named The District on 5th located in Tucson, Arizona for $67 million.

The 208-unit housing community serves the University of Arizona and comprises of 764 beds with two-, three-, and four-bedroom apartments. Additionally it features a pool with beach entry, clubroom, spa, computer lab, outdoor movie theater and other amenities. The community's average monthly lease rate is $633 per bed and it is 99% leased for the academic year 2012-2013.

The acquisition is aimed to strengthen Education Realty's market dominance with a significant presence at the University of Arizona which has growing enrollments. Presently the University's Tucson campus has a total of approximately 38,000 students. According to estimates from The Arizona Board of Regents, enrollments are expected to increase by 13,000 students by 2020. The acquisition further reinforces Education Realty's policy of investing in the high-growth collegiate housing industry as it focuses on providing premium quality student housing facilities.

Education Realty is one of the largest owners, developers and managers of collegiate housing in the U.S. It also provides third-party management services, including residence life and student development, marketing, leasing administration, strategic relationships and accounting services for student housing communities owned by educational institutions.

The company owns or manages 63 communities in 24 states with more than 36,000 beds in over 12,000 units. The ideal acquisition targets of the company are generally located in markets that have stable or increasing collegiate populations and high barriers to entry.

Education Realty currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, American Campus Communities, Inc (ACC) holds a Zacks #3 Rank.

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