Education Realty Trust, Inc.
) recently announced an underwritten public stock offering of 19.8
million shares. Moreover, as part of the transaction, the real
estate investment trust (REIT) intends to offer the underwriters an
opportunity to buy an additional 2.97 million shares within 30 days
of the offering.
The joint book running managers of the offering include Merrill
Lynch - a subsidiary of
Bank of America Corporation
), RBC Capital Markets - a part of
Royal Bank of Canada
) and KeyBanc Capital Markets - a division of
Though stock offering is a common method of fund raising for
companies, there are pros and cons associated with the same. While
the proceeds from the offering can be meaningfully utilized to
boost the companies' business, stock offering can actually result
in dilution of shares.
We believe this is what happened for Education Realty Trust. The
company's after trade stock price movement slumped nearly 3%
following the news release after the closing bell on Wednesday.
Nevertheless, the funds to be raised will support Education Realty
Trust's long-term growth prospects. The company plans to utilize a
portion of the net proceeds to finance the acquisition of The
District on Apache at Arizona State University. The remaining fund
will be used for general corporate needs or to lower the amounts
outstanding under the company's unsecured revolving credit
Education Realty Trust currently carries a Zacks Rank #3
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