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Blackstone continues to drill down on student housing

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. Fried Frank acted as counsel to Blackstone. The Fried Frank team was led by Steven Rudgayzer and included Suzanne deVries Decker; Libin Zhang; Adam L. Streicher; and real estate associates Tyler Dash, Eric D. Marlowe, Megan K. Misencik, and Heather Paik.

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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