Blackstone takes stake in US$784m student housing portfolio

[WASHINGTON] Blackstone is broadening its bet on US student housing, forming a US$784 million joint venture with Landmark Properties.

The new partnership will recapitalise a portfolio of buildings with 5,416 beds, according to people familiar with the transaction who asked not to be named because the matter is private. Landmark, based in Athens, Georgia, operates more than 75 student-housing properties with nearly 51,000 beds. The firm has US$7.7 billion in assets under management.

Investors are betting on college housing as students flock back to campus after more than a year of Covid-19 restrictions. They're seeing a relative bargain in the typically private, off-campus complexes compared with the cost of apartments and other residential assets, which have soared in value since the pandemic.

Other players are pouring in: Brookfield Asset Management is forming a joint venture with Scion Group to acquire at least US$1 billion in student-housing properties, the company's first US bet on the sector.

Private equity firm TPG started investing in student housing in November in a partnership with Cardinal Group Investments. Blackstone's deal with Landmark follows a US$1.2 billion acquisition of a 10,500-bed portfolio of US student housing with Greystar Real Estate Partners in 2018 and a US$6 billion deal in 2020 to buy a 28,000-bed portfolio in the UK from Goldman Sachs Group Inc.

The private equity giant is making the investment through Blackstone Real Estate Income Trust, a non-traded REIT, the people said. Since inception in 2017, BREIT has averaged annual total returns of 11.64 per cent.

BLOOMBERG