DeVry sells Houston campus

DeVry Inc., which operates for-profit schools of higher education, continued its strategy of real estate divestments with an announcement late Tuesday it sold its Houston campus.

The Oakbrook Terrace-based company sold its 98,000-square foot Houston campus for about $14.5 million Friday and will leaseback approximately 60 percent of the original space, according to a company statement.

The transaction is expected to improve margins by enabling the company to have a $2.2 million accounting gain to be recognized during a 12-year lease, while reducing real estate operating expenses.

The Houston transaction follows the company's 2007 sale-and-leaseback transactions in Phoenix and Seattle and 2006 transaction in West Hills, Calif.

"I think the move makes economic sense," said Todd Young, an investment analyst with Chicago-based Morningstar Inc. "If DeVry is occupying 60 percent of its available space, for example, it's better to sell the building and free up liquidity."

While DeVry has emphasized the development of its medical and business programs, the company's Houston transaction should not be interpreted as an indicator of its strategy in the region. "While we won't release our enrollments until later this spring and in the fall, we're committed to the Houston area," the company said. "We're providing the services that Houston's students want."

Among the financial benefits of a sale and leaseback of a commercial real estate are the elimination of the operating costs of owning and maintaining real estate and the payment of real estate taxes.