Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
Randy Churchey, CEO & Chairman of Education Realty Trust, Inc. (EDR), interviewed with TWST for this year’s Education report. Since the interview was published, EDR‘s stock price increased by approximately 15%, from $32 to currently $37.
Churchey discussed the trend of universities outsourcing student housing, where EDR has distinguished itself. Currently, he said, University of Kentucky’s housing is under the care of EDR:
What the university has found is that enrollment has gone up much more so than at their peer institutions. Enrollment has gone up 3% or 4% a year over the last few years, when peer institutions have been more in the 1% to 2% range. The University of Kentucky has also attracted a higher-quality student and is now in the top 10 among their peers in National Merit Scholars.
They’ve always known that when students live on campus, they perform better academically; numerous studies across the U.S. show that. An interesting byproduct they’ve found is that with this new housing, the retention rate — i.e., kids staying from their freshman to sophomore year or sophomore to junior year — is higher than in the past. And so every different metric that the university looks at — speed of building the project, cost containment of the project, efficient management of the operations after the project was built and then the student outcomes — all have been very, very favorable.
EDR is also growing in other university campuses, he said:
We do own two communities on the Syracuse University campus under the same type of model; one community at the University of Texas, Austin; and one at Texas Christian University. And now, of course, we own all the communities I just mentioned at Kentucky. What we are finding is that there are numerous opportunities at many universities that are interested in having this type of private-public partnership for one or two assets. We’ve not found other universities today that want to outsource the entire housing inventory, but I believe that’s going to come.
Universities don’t exactly move at a fast pace, but they’ve now gotten comfortable with a private developer owning an asset or two on campus as a viable option. I think once the successful results from the University of Kentucky get more publicity, more universities will be looking at public-private partnerships as an option. A university’s core competency is educating students, it’s not necessarily being a developer, owner and an operator of real estate, so I believe we are going to have more of those opportunities, but they may come fairly slowly.
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