In a significant real estate transaction, private equity firm KKR has agreed to purchase a portfolio of 19 student housing properties from Blackstone Real Estate Income Trust (BREIT) for an impressive sum of about $1.64 billion. This deal marks a notable expansion in KKR’s real estate investment strategy, particularly focusing on the student housing sector, which has seen a surge in demand in recent years.
The portfolio comprises 19 student housing assets located in 14 four-year public universities across 10 states. This strategic acquisition is expected to be completed by the third quarter of the year, highlighting the confidence in the student housing market’s growth potential. The properties, which include more than 10,000 beds, are spread across the U.S., with locations near universities such as Auburn University, Arizona State University, Penn State, the University of Virginia, and Virginia Tech, among others.
KKR’s investment in this portfolio is being made via its Real Estate Partners Americas III fund. The transaction not only underscores KKR’s long-term conviction in the student housing sector but also demonstrates the strong demand for high-quality assets in attractive markets. The deal was announced on April 25, 2024, and includes properties located near 14 public universities, emphasizing the strategic value of the locations in relation to the student population and university growth trends.
Following the acquisition, the management of these properties will be transferred to University Partners, a leading owner and operator of student housing across the U.S. This move is set to significantly increase University Partners’ managed portfolio to approximately $4 billion in property value, spanning across 25,000 beds.
Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate, described the transaction as “an excellent outcome for BREIT’s investors,” highlighting the strong demand for the high-quality assets in attractive markets. The deal represents a strategic repositioning for Blackstone Real Estate Income Trust, showcasing the trust’s ability to unlock significant value through asset sales while maintaining a robust portfolio of investments in the real estate sector.
BREIT’s redemptions have been a significant topic of discussion, particularly as Blackstone faced a high volume of investor withdrawal requests. In late 2022, the firm had to limit redemptions after these requests breached a certain threshold within a single month or quarter. This led to concerns about the fund’s liquidity and the broader implications for the real estate market. However, recent developments show a more positive outlook. Blackstone was able to fulfill all investor redemption requests in February and March for the first time since late 2022, when the fund had to limit payouts due to the high volume of withdrawal requests. This marks a significant improvement in the fund’s liquidity position and its ability to meet investor demands.
In summary, KKR’s acquisition of a $1.64 billion student housing portfolio from Blackstone’s Real Estate Income Trust signals a strong confidence in the student housing market’s growth potential. The transaction is expected to further solidify KKR’s position in the real estate investment space, particularly within the student housing sector, and provide University Partners with a significant expansion of its managed portfolio.