Blackstone continues to drill down on student housing

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Blackstone is partnering with student housing developer
Landmark Properties on a $784 million portfolio of dorms across the US.

The deal includes eight student housing assets totaling
5,416 beds across the U.S.

Jacob Werner, Blackstone Real Estate senior managing director,
said, “We are thrilled to partner with Landmark, one of the top student housing
developers in the U.S., to acquire this portfolio of well-located assets
concentrated at leading U.S. universities with growing enrollments.

“Student housing has a history of being resilient while
generating strong cash flows and this transaction is consistent with BREIT’s
strategy of acquiring high-quality, income generating properties that have
attractive long-term growth potential. We look forward to growing our presence
in this asset class and working together on future transactions.”

With the transaction, Landmark’s portfolio includes 79
student housing communities with over 50,600 beds.

“We are very excited to form this partnership with
Blackstone, one of the world’s leading real estate private equity firms,” said
Landmark Properties president and CEO Wes Rogers. “We have a great relationship
with the Blackstone team and are looking forward to completing additional
transactions together.

“We have long believed that student housing in top markets
offers a compelling investment opportunity, particularly when well located,
developed with the type of high-quality amenities students expect and managed
to an institutional standard. Blackstone’s ongoing investments in this space
further validate the strength of this sector.”

TSB Capital Advisors acted as financial advisor to both
Landmark Properties and BREIT.

The student housing market suffered a mighty blow at the
hands of the COVD pandemic as schools across the country were forced to close.
Blackstone, however, has been among the top buyers in the sector in 2021.

According to a report from valuation and appraisal experts
Marshall + Stevens, Blackstone was second only to Singapore-based multinational
alternative asset manager CapitaLand Ltd in Q1 2021 student housing acquisitions
spending some $60 million. That follows the investment giant’s $6 billion acquisition
last year of UK student accommodation firm iQ.

The market average price per bed in the US has seen a steady
incline since 2017, increasing from $687 per bed to as high as $722 per bed.
However, as of Q1 2020 the incline has reversed course and Q3 2020 saw a
continued decline. In Q3 2020, the market average price per bed is $719.

Even though the last two quarters have seen a downward
trend, it is not a significant decline and uncertainty of how universities and
colleges will reopen is expected to directly impact the price per bed, and
whether pricing trends move up or down.

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