NASHVILLE, TN—Despite leasing “vigor” in the second quarter, analysts at MLV & Co. Inc. maintain a “hold” position on Education Realty Trust, Inc. due to its slight miss on quarterly revenue estimates.

In its research report, MLV states that Education Realty's FFO came in a penny below consensus at $0.15 a share and two cents below MLV's FFO estimate for the student housing real estate investment firm.

EdR is one of the largest owners, developers and managers of collegiate housing in the United States. The self-administered and self-managed REIT owns or manages 64 communities in 24 states with more than 36,000 beds in more than 12,000 units.

“EdR continues to lay out a solid pipeline for growth as the company continues to execute on its portfolio recycling strategy while successfully juggling the 2014/15 lease-up,” MLV states. “We find the company's involvement in the RFQ for the University of Georgia to be interesting given the nature of the universities involved, but we see the potential for EdR's involvement to be entirely in a fee for services capacity, which would likely be viewed favorably by investors.”

MLV Senior Analyst Ryan Meliker is forecasting a $12-a-share target price for the stock by year's end. He and MLK Associate Michael Kodesch state that among the positive trends at Education Realty include its on-campus development deals, including a large transaction with the University of Kentucky.

“The portfolio has and is expected to deliver the strongest internal growth profile among the Campus Housing REITs; and we believe EdR's 4.4% current dividend yield, which is above the Apartment REIT average of 3.3%, is safe,” MLV states in its report.

The MLV analysts are concerned about EdR's external growth, which is trading at a material discount to net asset value. “While we don't see any near-term capital needs given the company's asset disposition plans, for continued growth, equity offerings may be in order. Trading at a material discount to our NAV estimate, either the company will elect to limit its growth or dilute shareholders at a material discount to NAV. Either scenario limits upside to the stock,” the analysts state in their report.

Instant Insights /

Analyst Maintains 'Hold' Position on Education Realty Trust

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