With EdR’s experience and financial strength, we can be your one partner for development, construction and financing. As a public company, EdR has the depth to finance a variety of developments — on-campus construction, acquisitions, joint ventures or off-campus developments — with our own equity investments or via loans with lending institutions, with which we have excellent relationships. EdR also can call on our relationships with lending institutions for primary support. EdR has the experience, tenacity and creativity to deliver your project through various financial alternatives. Together, we find the financial structure that’s right for your university or college.
EdR — a $1.3 billion real estate investment trust (REIT) — operates with full, verifiable disclosure of our history, abilities and financial performance. KeyBanc Capital Markets rates EdR as the 29th-best performer over the last three years out of other 138 real estate investment trusts. For specifics, please contact the EdR Development Team. While we can be creative with our approaches, our most common methods of financial delivery for on-campus foundation or university developments are: The ONE PlanSM — The On-Campus Equity Plan Tax-Exempt Bonds
EdR ON-CAMPUS EQUITY PLAN — The ONE Plan℠
The ONE Plan℠ allows colleges and universities to use our equity and financial stability to develop and revitalize campus housing while preserving their funds and debt capacity for other campus projects. With The ONE Plan℠, EdR funds the project and develops the design in collaboration with the university to meet its needs and goals.
STRUCTURE AND BENEFITS
EdR assumes 100% of our equity investment and debt responsibility reducing potential adverse impact on the university’s debt capacity. With The ONE PlanSM, the university or college has one partner and one equity source. We are your financial, development and operating partner. Our interests and desire for success align with yours in every aspect of the project.
- As a for-profit entity, EdR becomes ground lessee for a specific parcel and owner of leasehold interest for a specified lease term (typically 50-75 years).
- EdR does not require a financial or occupancy guarantee. Based on review of actual market demand, the university may be required to provide marketing support.
- EdR funds and develops projects with approved plans and specifications.
- EdR (not a third party) assumes equity and debt responsibility. EdR’s equity can’t count against your debt capacity.
- Upon completion, EdR owns the project or a leasehold interest in the project, for term of ground lease. University receives annual ground-lease payments. EdR receives the balance of the project’s net cash flow to provide a return on their significant investment in the project.
- Because we own the ground lease interest, EdR does not charge a development fee.
- EdR manages the housing operations and maintenance and can provide a Residence Life program for the students in accordance and conjunction with the university.
- At the end of the ground lease, ownership of the asset reverts to the university.
TAX EXEMPT BOND FINANCING
EdR has broad experience and expertise in financing through tax-exempt bonds, wherein the university is not the borrower. This “project-specific-financing” typically does not require any guarantee or financial support from the university. Since 2000, EdR has delivered more than $1.3 billion of on-campus student housing around the nation with “project-specific” tax-exempt bond financing.
Under this structure, typically a 501(c)(3) not-for-profit entity owns the housing under a long-term ground lease from the university. The university controls all aspects of the project. Since EDR does not participate in project cash flow, 100% of the net cash operating profit flows back to the university or the not-for-profit entity. The not-for-profit entity is the borrower, and the university does not typically guarantee the debt. The most common structure entails the university leasing its land to a university-related foundation or a limited liability corporation subsidiary of a foundation. EdR’s role is as a fee-for-service developer for the project, not the owner. The project financing involves project-based debt, requiring self-sustaining operations. The loan to cost is 100 percent. EdR provides development and construction oversight services for a fee based on project cost. EdR and the not-for-profit entity execute a reimbursement agreement for development-related costs prior to closing. Repayment is received when bond financing closes.
- The university saves its limited capital and human resources to build the project, which is built and managed to university specifications, policies and goals.
- The university receives substantial annual ground rent payments.
- With no financial obligation, the university receives an excellent on-campus amenity and state-of-the-art housing for its residents.
- Savings on real-estate taxes and sales taxes on materials are realized.
- Typically this financing option provides a lower cost of capital.
- Improvements revert to the university upon completion.
- Depending on the nature of housing and level of financial commitment by the university to the project, this structure may adversely impact the institution’s debt capacity as determined by the rating agencies. Conversely, the university’s credit rating may improve, as occurred with the Pennsylvania State System of Higher Education.
- Cost of issuance and reserves may or may not add 15 to 20% to the total development costs.
EdR is often asked to partner with other developers or land owners who would like our financing assistance as well as student housing expertise. In these cases, we use our own equity or attain mezzanine loans for the project. If you would like to know more, please contact Scott Barton, sbarton@EdRtrust.com, 901-259-2582.
Syracuse University ― Most Creative On-Campus Public/Private Financing
Syracuse University competitively selected EdR to fulfill its need for cutting-edge, upper level housing to replace 40-year-old outmoded facilities. EdR used its innovative On-Campus Equity Plan ― The ONE PlanSM ― to allow Syracuse to use EdR’s equity and financial stability to develop and revitalize the on-campus housing while preserving the university’s funds and debt capacity for other projects. EdR funded the project and developed the design in collaboration with the university, meeting its needs and goals.
University of Connecticut — Most Creative Financing-Off Campus Development
EdR was the lynchpin in culminating 10 years of effort by a master developer and a community group to develop a heart of a collegiate town appropriate for a prestigious institution like the University of Connecticut. Plans were in place and grants and bond proceeds were maximized to the extent practical. Still, a large cash infusion was needed to reach the goal. EdR provided the financial backing and the collegiate housing expertise needed to bring Storrs Center to life.
Johns Hopkins Medical Institute — Most Creative Public-Private Financing
To attract the best students from all over the world, Johns Hopkins Medical Institute (JHMI) had to offer world-class housing as well. They called EdR. The result is a 20-story high rise that features 573 beds in 321 units, a green park-like rooftop terrace, fitness center, conference room, high-end finishes, casual study lounge on the rooftop, adjacent structured parking (university-owned), and shuttle service to JHMI and shopping (many of the residents lack cars). The units, furnished and unfurnished, include in-unit washers and dryers.