Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): October 26, 2010 (October 11,
2010)
Education
Realty Trust, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
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Maryland
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001-32417
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20-1352180
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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530 Oak Court Drive, Suite 300
Memphis, Tennessee
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38117
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction A.2.
below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
Disposition
of Four Student Housing Communities
On
October 11, 2010, Education Realty Operating Partnership, LP and certain of its
subsidiaries, each of which is an indirectly owned subsidiary of Education
Realty Trust, Inc. (collectively, the “Company”)
entered into a Purchase and Sale Agreement (the “First
Agreement”)
with KAREP REIT I, Inc. (“KAREP”).
Pursuant to the First Agreement, the Company will sell the following student
housing communities (the “Communities”)
to KAREP:
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The
Gables, a 288-bed community serving Western Kentucky University in Bowling
Green, Kentucky;
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Western
Place, a 504-bed community serving Western Kentucky University in Bowling
Green, Kentucky;
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Berkeley
Place, a 480-bed community serving Clemson University in Clemson, South
Carolina; and
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The
Pointe at Southern, a 528-bed community serving Georgia Southern
University in Statesboro, Georgia.
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The sales
price for the Communities is approximately $38.7 million with a non-refundable
deposit of $1.0 million being placed into escrow. The Company expects to receive
net proceeds of approximately $20.7 million after repayment of related debt of
$17.2 million and other closing costs. The First Agreement contains customary
terms and conditions and is not subject to any financing contingencies. KAREP is
not affiliated with the Company or its affiliates, and the sale of the
Communities results from arm’s-length negotiations between the Company and
KAREP. The sale of the Communities is expected to close in the fourth quarter of
2010.
Disposition of Five Student
Housing Communities
Additionally,
on October 25, 2010, the Company entered into another Purchase and Sale
Agreement with KAREP (the “Second
Agreement”). Pursuant to the Second Agreement, the Company will sell the
following student housing communities (the “Additional
Communities”) to KAREP:
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Troy
Place, a 408-bed community serving Troy University in Troy,
Alabama;
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The
Reserve at Jacksonville, a 504-bed community serving Jacksonville State
University in Jacksonville,
Alabama;
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The
Reserve at Martin, a 384-bed community serving University of Tennessee at
Martin in Martin, Tennessee;
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The
Chase at Murray, a 408-bed community serving Murray State University in
Murray, Kentucky; and
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Clemson
Place, a 288-bed community serving Clemson University in Clemson, South
Carolina.
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The sales
price for the Additional Communities is approximately $46.1 million with a
non-refundable deposit of $1.0 million being placed into escrow. The
Company expects to receive net proceeds of approximately $29.6 million after
repayment of related debt of $16.1 million and other closing costs. Pursuant to
the Second Agreement, the Company has obtained a letter of credit of $3.0
million in favor of KAREP to ensure the closing of the sale of the Additional
Communities. The Second Agreement contains customary terms and conditions and is
not subject to any financing contingencies, and the sale of the Additional
Communities results from arm’s-length negotiations between the Company and
KAREP. The sale of the Additional Communities is expected to close in the first
quarter of 2011.
The
Company expects to use the net proceeds from the sales of the Communities and
the Additional Communities to reduce outstanding debt, finance previously
announced development projects at the University of Texas at Austin, Johns
Hopkins University and the University of Connecticut and fund additional
development and acquisition opportunities.
Item
7.01. Regulation FD
Acquisition
of Student Housing Community at the University of Virginia
On
October 22, 2010, pursuant to a Contract of Sale (the “Virginia
Agreement”) with PB BH Charlottesville PO Limited Partnership (“PB BH”),
the Company acquired The Grandmarc at the Corner (“The
Grandmarc”), a 641-bed student community serving the University of
Virginia in Charlottesville, Virginia (“UVA”). The
Grandmarc opened in 2006 and is conveniently located within two blocks of campus
and “The Corner,” a popular destination for students due to the wide variety of
restaurants, shopping and entertainment venues. Student enrollment at UVA for
the 2009/2010 academic year was approximately 24,400. As of September 30, 2010,
The Grandmarc was 90.8% occupied at an average monthly rental rate per bed of
approximately $670.
The
purchase price of the Grandmarc was approximately $45.5 million. The Company
will expense related acquisition costs of approximately $1.5 million in the
fourth quarter of 2010. The Company funded the acquisition with existing cash
and a draw on its credit facility. The Virginia Agreement contains customary
terms and conditions. PB BH is not affiliated with the Company or its
affiliates, and the acquisition of The Grandmarc at the Corner results from
arm’s-length negotiations between the Company and PB BH.
Asset
Impairment and Loan Prepayment Fees
As part
of its third quarter review of asset carrying values, the Company will recognize
an asset impairment charge of approximately $33.6 million in the third quarter.
Additional detail regarding the non-cash impairment charge will be disclosed in
the Company’s Quarterly Report on Form 10-Q for the third quarter ended
September 30, 2010. In connection with the contemplated reduction of debt, the
Company also expects to incur loan prepayment fees of approximately $0.7 million
that will be recognized upon repayment of debt in the next two fiscal
quarters.
On
October 25, 2010, the Company issued a press release announcing the disposition
of the Communities and the Additional Communities and the acquisition of The
Grandmarc. A copy of the press release is furnished herewith as Exhibit 99.1 to
this Current Report on Form 8-K.
Safe
Harbor Statement
The
Company believes that certain statements in this Current Report on Form 8-K may
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward looking statements contained
herein include, but are not limited to, statements regarding (i) the Company’s
plan to dispose of the Communities and the Additional Communities; (ii) the
Company’s expectation that the sale of the Communities and the Additional
Communities will close in the fourth quarter of 2010 and the first quarter of
2011, respectively; (iii) the Company’s estimated
non-cash impairment charge to be recorded as a result of the Company’s third
quarter review of asset carrying values; and (iv) the loan prepayment fees that the Company expects to
recognize upon the repayment of debt in the next two fiscal
quarters.
These
statements are made on the basis of management’s views and assumptions regarding
future events and business performance as of the time the statements are made.
Forward-looking statements are subject to a number of known and unknown risks,
uncertainties and other factors and are not guarantees of future performance.
Actual results may differ materially from those expressed or implied.
Information concerning factors that could cause actual results to differ
materially from those in forward-looking statements is contained in the
Company’s filings with the Securities and Exchange Commission. The Company
disclaims any intention or obligation to update publicly any forward-looking
statements, whether in response to new information, future events or otherwise,
except as required by applicable law.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No.
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Description
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99.1
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Press
Release dated October 25,
2010
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SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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EDUCATION
REALTY TRUST, INC.
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Date:
October 26, 2010
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By:
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/s/ Randall H. Brown
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Randall
H. Brown
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Executive
Vice President, Chief Financial Officer,
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Treasurer
and Secretary
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INDEX
TO EXHIBITS
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Exhibit No.
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Description
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99.1
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Press
Release dated October 25,
2010
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