KKR banks on student success with $1.64bn Blackstone deal

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New York-listed investment firm KKR is paying Blackstone Real Estate Income Trust $1.64 billion for a 10,000-bed PBSA portfolio spread across 10 US states.

The portfolio comprises 19 premium student housing assets serving 14 public universities. BREIT originally acquired the portfolio for $1.2 billion in a joint venture with Greystar Real Estate Partners in 2018.

Once the current deal is completed in the third quarter of the year, the portfolio will be managed by US student housing operator University Partners, which KKR launched in 2016 in order to create a vertically-integrated platform. University Partners will own or manage over 25,000 beds when the BREIT portfolio included, representing nearly $4 billion of property owned by KKR and others.   

Justin Pattner, partner at KKR and head of real estate equity in the Americas said that the portfolio will add a diverse mix of high-quality properties. “The operating capabilities we have built with University Partners over the past decade and our ability to transact at scale, position us to create value for our investors and to continue investing in great living experiences across these communities. We are deploying into what we view as a compelling market environment to purchase quality real estate.”

Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate, said the deal is an “excellent outcome” for BREIT’s investors and demonstrates the strong demand for the high-quality assets in attractive markets. “We continue to have long-term conviction in student housing and are actively growing through BREIT’s student housing platform, American Campus Communities, which is the largest owner of student housing in the US.”