Quiver Quantitative - Blackstone (NYSE:BX) (BX) has reached an agreement to sell a substantial student housing portfolio to KKR (KKR) for $1.64 billion, highlighting continued investor interest in specialized real estate sectors. The portfolio comprises 19 properties with over 10,000 beds, primarily located near 14 public universities. This move by Blackstone Real Estate Income Trust (BREIT) reflects a strategic repositioning, even as Blackstone remains invested in the student housing market through its American Campus Communities (ACC). Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate, emphasized that this sale reflects strong market demand for high-quality, well-located assets, achieving a 7% premium over net asset value.
This transaction is part of Blackstone's broader strategy of capitalizing on favorable market conditions to offload assets at a profit. Earlier this year, Blackstone also sold $1 billion worth of warehouses in California and part of a commercial-property loan portfolio inherited from the collapsed Signature Bank. The sale to KKR not only bolsters Blackstone’s liquidity but also highlights its ongoing confidence in the real estate market, as evidenced by its recent acquisitions, including a $10 billion deal for Apartment Income REIT and a $3.5 billion agreement to purchase Tricon Residential.
Market Overview: -Blackstone to sell 19 student housing properties to KKR for $1.64 billion. -Properties located near major public universities across the US. -Both Blackstone and KKR remain bullish on the student housing sector.
Key Points: -Blackstone Real Estate Income Trust (BREIT) divests portfolio to KKR's University Partners. -Sale underscores investor demand for well-located student housing assets. -Blackstone maintains commitment to student housing through American Campus Communities (ACC). -KKR expands University Partners portfolio to over 25,000 beds.
Looking Ahead: -Deal expected to close by Q3 2024. -Blackstone continues to shed assets, exceeding $20 billion sold at a premium since 2022. -KKR sees student housing as a compelling investment opportunity.
On the other side of the deal, KKR is expanding its footprint in the student housing sector through its University Partners platform, which it launched in 2016. The acquisition will bring University Partners' total managed beds to over 25,000. KKR’s long-term strategy focuses on high-demand student housing near major educational institutions, a market that continues to show strong enrollment growth and limited new supply. This latest acquisition is funded through KKR Real Estate Partners Americas III fund, indicating KKR’s continued commitment to expanding its real estate portfolio in promising sectors.
This deal between Blackstone and KKR underscores a broader trend in the real estate market where major firms are adjusting their portfolios in response to shifting market dynamics and opportunities. Both firms are not only realizing gains from asset sales but are also strategically investing in sectors they believe will offer sustained growth. As the commercial property market shows signs of bottoming out, according to Blackstone President Jon Gray, both Blackstone and KKR are positioning themselves to capitalize on the next wave of real estate opportunities, particularly in niche markets like student housing which offer resilience against broader economic fluctuations.
This article was originally published on Quiver Quantitative