Blackstone agreed to sell a student-housing portfolio to KKR for US$1.64 billion.

Blackstone Real Estate Income Trust (Breit) will offload 19 student-housing properties with more than 10,000 beds to funds managed by KKR, according to a statement on Thursday (Apr 25). The deal, which is expected to be completed by the third quarter, includes properties located near 14 public universities.

“This transaction is an excellent outcome for Breit’s investors and demonstrates the strong demand for the high-quality assets in attractive markets that Breit owns,” Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate, said in the statement. 

Blackstone spent years amassing a major portfolio of student housing properties, most notably through its 2022 acquisition of American Campus Communities (ACC). The company continues to believe in student housing, Werner said, with ACC expected to open six additional communities this year. Breit bought the portfolio that it’s selling to KKR in 2018 through a joint venture with Greystar Real Estate Partners.

Blackstone sold $1 billion of California warehouses in March and offloaded a slice of a commercial-property loan portfolio from the failed Signature Bank. With the latest student housing deal – which was sold at a 7% premium to net asset value – Breit has sold US$20 billion of real estate assets at a premium to NAV since the start of 2022, according to Blackstone.

The firm has also been hunting for deals as prices fall across the commercial property market, with President Jon Gray saying that the asset manager thinks real estate prices are bottoming. Blackstone struck a US$10 billion deal earlier this month to purchase Apartment Income Reit and agreed in January to buy rental housing landlord Tricon Residential for US$3.5 billion. 

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KKR is acquiring the portfolio primarily from its KKR Real Estate Partners Americas III fund. It will manage the properties through University Partners, an operator of student housing across the US that KKR started in 2016.

“Student housing is a sector that we have long-term conviction in,” Justin Pattner, a partner at KKR and head of real estate equity in the Americas, said in the statement. BLOOMBERG