Blackstone Sells Student Housing Portfolio to KKR for $1.6 Billion

Blackstone Inc. has agreed to sell a student-housing portfolio to KKR & Co. for $1.64 billion. The portfolio comprises 19 properties with over 10,000 beds, located near 14 public universities. The deal is expected to be finalized by the third quarter.

Blackstone's Perspective

Blackstone Real Estate Income Trust (BREIT), which owns the portfolio, sees this as a positive outcome for investors. Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate, highlights the strong demand for quality assets in desirable markets.

Blackstone's Strategy and Previous Transactions

Blackstone has been strategically investing in student housing, notably through the 2022 acquisition of American Campus Communities (ACC). They continue to believe in this sector, as evidenced by ACC's planned expansion. The portfolio being sold to KKR was acquired in 2018 through a joint venture with Greystar Real Estate Partners.

Recent Transactions and Market Trends

Blackstone has been active in reshaping its real estate portfolio, selling $1 billion of California warehouses and portions of a commercial-property loan portfolio. The student housing deal, sold at a premium to net asset value (NAV), adds to the $20 billion of assets sold at a premium since 2022. Blackstone is capitalizing on falling commercial property prices, with President Jon Gray expressing optimism about market trends.

KKR's Strategy and University Partners

KKR's University Partners, established in 2016, focuses on acquiring student housing properties near universities across the US. With this latest deal, University Partners will own and manage over 25,000 beds. Justin Pattner, partner at KKR, emphasizes the company's long-term confidence in the student housing sector and sees the current market environment as compelling.

Acquisition Details and Market Outlook

KKR is acquiring the portfolio primarily through its KKR Real Estate Partners Americas III fund. Travis Roberts, CEO of University Partners, highlights the experience in similar markets and believes in the continued growth and demand for student housing in top university locations due to enrollment increases and limited supply.

The sale of Blackstone's student-housing portfolio to KKR underscores strategic shifts in both companies' real estate portfolios and their outlook on market trends, particularly in the student housing sector.