KKR Acquires Blackstone's $1.6B Student Housing, Eyes Growth

Key Takeaway

• KKR acquires Blackstone's student housing portfolio for $1.6 billion, signaling strong interest in the resilient student housing sector.
• The deal includes over 10,000 beds across 19 buildings, mostly near public universities, reflecting a strategic investment in education-linked real estate.
• Blackstone's sale is part of its broader strategy of divesting real estate assets at a premium, amidst a surge in student housing investments due to high demand and limited supply.

A Landmark Deal in Student Housing

In a significant move within the real estate investment sector, Blackstone has agreed to sell a substantial student housing portfolio to KKR for $1.6 billion. This portfolio, comprising over 10,000 student housing beds across 19 buildings, underscores a growing interest in the student housing market. Notably, these properties are primarily located near public universities, highlighting the strategic focus on locations with steady demand. This transaction, set to close in the third quarter, marks a pivotal shift in ownership from Blackstone's Real Estate Income Trust (BREIT) to KKR’s University Partners, which will manage more than 25,000 student housing beds post-deal.

Strategic Implications and Market Dynamics

The sale represents a 7 percent premium to net asset value, signaling a strong belief in the value and resilience of the student housing sector. This move is part of Blackstone's broader strategy of divesting real estate assets at a premium, including a recent $1 billion sale of warehouses in California. The firm's aggressive acquisition strategy, including the purchase of Apartment Income REIT for $10 billion and Tricon Residential for $3.5 billion, reflects a bullish outlook on real estate values. The student housing sector, in particular, has shown robust demand and limited supply, making it an attractive investment compared to traditional multifamily and commercial assets, which have been impacted by high interest rates.

The Growing Appeal of Student Housing Investments

The transaction between Blackstone and KKR highlights the increasing allure of student housing as an investment class. With the top 25 student housing owners controlling just under 660,000 beds across 1,142 properties, there is significant room for growth in this sector. The resilience of student housing, driven by increasing demand and limited supply on campuses nationwide, positions it as a promising area for investment. This sector's appeal is further bolstered by the broader market's challenges, including the impact of high interest rates on other real estate investments.

A Perspective on the Future of Real Estate Investments

This landmark deal not only signifies a major transaction in the student housing market but also reflects broader trends in real estate investment. Blackstone's strategy of selling assets at a premium and actively seeking new investment opportunities suggests a confidence in the market's potential for growth. The focus on student housing, in particular, underscores an acknowledgment of its resilience and potential as a stable investment avenue amidst broader market uncertainties. As interest rates challenge traditional real estate sectors, student housing emerges as a beacon of growth and stability.