KKR buys Blackstone student housing portfolio for $1.6B

Blackstone unloaded a portfolio of more than 10,000 student housing beds to KKR for $1.6 billion.

The firm’s flagship fund, Blackstone Real Estate Income Trust, agreed to sell the 19-building portfolio to KKR’s University Partners, Bloomberg reported. The transaction is expected to close in the third quarter.

No details were revealed about what properties were trading hands, but a majority of the properties are in close proximity to public universities. The portfolio last traded hands in 2018, when Blackstone acquired it in partnership with Greystar Real Estate Partners. An acquisition of 10,500 beds closed in September 2018 for $1.2 billion, though it’s uncertain if those are the same assets being sold to KKR.

KKR launched University Partners in 2016. The business will own and manage more than 25,000 student housing beds when the Blackstone deal closes.

The deal for BREIT represents a 7 percent premium to net asset value, but doesn’t reflect any waning belief in the student housing sector. BREIT made a splash in 2022 when it acquired American Campus Communities, which expects to add six communities to its holdings this year.

Since the start of 2022, BREIT has sold $20 billion worth of real estate assets at a premium to net asset value, including a recent deal to sell $1 billion worth of warehouses in California. Blackstone has also been on a deal-seeking spree under the hope real estate values are bottoming. The firm acquired Apartment Income REIT for $10 billion and Tricon Residential for $3.5 billion.

Interest in student housing investments has been surging. Whereas multifamily and traditional commercial assets have become more unappealing due to high interest rates. But student housing has proven resilient, given increasing demand and limited supply on campuses around the country.

It’s also a sector with room to grow; as of February, the top 25 student housing owners have just under 660,000 beds across 1,142 properties, according to Student Housing Business.

— Holden Walter-Warner

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