NEW YORK - Investment firm KKR has reached a definitive agreement to purchase a portfolio of 19 student housing properties from Blackstone (NYSE:BX) Real Estate Income Trust, Inc. (BREIT) for approximately $1.64 billion. The transaction is expected to close by the third quarter of 2024, subject to customary closing conditions.
The portfolio includes over 10,000 beds anchored to 14 leading four-year public universities across 10 states, featuring a range of amenities and the majority within walking distance to campus. The acquisition, primarily from KKR's Real Estate Partners Americas III fund, will be managed by University Partners, a KKR company specializing in student housing.
Justin Pattner, KKR's Partner and Head of Real Estate Equity in the Americas, expressed confidence in the student housing sector and the firm's ability to create value for investors through this acquisition.
Blackstone, through its portfolio company American Campus Communities (NYSE:ACC), remains the largest owner of student housing in the U.S. Jacob Werner, Co-Head of Americas Acquisitions for Blackstone Real Estate, highlighted the deal as beneficial for BREIT's investors and indicative of the strong demand for high-quality student housing.
Travis Roberts, CEO of University Partners, noted that the acquisition expands their presence in top university markets, which are expected to see continued enrollment growth and limited new supply.
KKR's investment in the student housing sector aligns with its strategy of building scaled exposures to attractive real estate sectors. University Partners will own and manage over 25,000 beds, representing nearly $4 billion in property value, inclusive of the pending acquisition.
Blackstone's real estate business manages approximately $339 billion in investor capital, and BREIT is a perpetual-life real estate investment platform that focuses on income-generating U.S. commercial real estate.
This news is based on a press release statement. Legal advisory for the deal was provided by Gibson, Dunn & Crutcher LLP for KKR, while TSB Capital Advisors and J.P. Morgan Securities LLC served as BREIT's financial advisors, with Simpson Thacher & Bartlett LLP as legal advisor.
InvestingPro Insights
As KKR embarks on the strategic acquisition of a significant student housing portfolio, the company's financial health and market performance are key indicators for investors monitoring the deal's potential impact.
KKR's market capitalization stands at an impressive $85.64 billion, reflecting the firm's substantial presence in the investment landscape. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is 22.8, with a slight adjustment to 23.27 when considering the last twelve months as of Q4 2023.
The robust revenue growth KKR has experienced is notable, with a staggering 238.39% increase in the last twelve months as of Q4 2023. This surge is indicative of the firm's ability to significantly expand its financial footprint.
Moreover, KKR's commitment to shareholder returns is evident through its consistent dividend payments over the past 15 years, with a recent dividend yield of 0.68% and a dividend growth of 6.45% in the last twelve months as of Q4 2023.
InvestingPro Tips highlight that KKR has raised its dividend for four consecutive years and maintains a strong return over the last decade, reinforcing the firm's dedication to delivering value to its investors. Still, with 12 analysts revising their earnings downwards for the upcoming period and an anticipated sales decline in the current year, investors should be mindful of these forecasts when considering the company's future performance.
For those looking to delve deeper into KKR's financials and market prospects, InvestingPro offers additional insights and metrics. With the use of the exclusive coupon code PRONEWS24, investors can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of information including 10 more InvestingPro Tips not listed here. The next earnings date is set for May 1, 2024, which will be a pivotal moment for stakeholders to assess the impact of the student housing portfolio acquisition and other strategic initiatives.
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