EdR CEO Sees Benefits From REIT’s Revenue Optimization System

Randy Churchey, chairman and CEO of EdR (NYSE: EDR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

EdR is one of the largest developers, owners and managers of collegiate housing communities in the United States.

Churchey noted that the student housing industry as a whole has posted solid results during the last decade. Same store net operating income (NOI) has increased about 4.3 percent during that time, versus 4.0 percent for the multifamily segment, he said.  In the last five years, EdR has produced 4.3 percent growth in same store NOI, according to Churchey.

EdR utilizes a revenue optimization system that monitors properties on a daily basis, Churchey explained.  The system looks at  leasing velocity, compares it to EdR’s competitors, and recommends price increases or decreases.  “We think the system is state-of-the-art and by our results I think it proves it is best-in-class,” Churchey said.

Finding acquisitions, meanwhile, is proving a challenge, Churchey observed. “We’re having a difficult time finding acquisitions that meet our yield hurdles,” due to the large amount of capital chasing assets, he said.

EdR’s prime focus with regard to acquisitions is location: assets must be within walking distance of campus. At the same time, EdR seeks properties located at large, growing universities with enrollment greater than 15,000 students.

Churchey also said he sees potential for REITs to increase their share of the student housing market.

Today, the three public REITs own less than 5 percent of the nation’s purpose-built student housing assets, Churchey said. He predicts that share can increase to as large as 20 percent.

One reason for the potential to grow is the fact that about 50 percent of students at a typical university are living off-campus in single-family homes or other types of accomodation, Churchey said.

“A lot of these (students) are migrating to purpose-built student housing,  so we think the share of the pie is going to grow and we think we can grow our share of the market much larger,” he said.