Blackstone bets on campus housing with $13B acquisition
National housing shortage has bumped up rent on campus and more international students has boosted demand
Blackstone Inc. agreed to buy student-housing owner American Campus Communities Inc. in a deal valuing the company at about $12.8 billion, including debt, a bet that rents will continue to rise as more college students return to campus.
Austin, Texas-based ACC is the largest publicly traded owner and developer of student housing in the U.S. The deal marks Blackstone's single biggest foray into the sector to date.
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Rent collections in student housing remained high throughout the pandemic, despite an extended stretch in 2020 when many students attended classes remotely while spending time off campus.
Now, the sector looks poised to benefit from a number of tailwinds. There is relatively little new student-housing construction, which means that property owners face little new competition. A national housing shortage is pushing up rents near campus, too, and a return of more international students could boost demand further. That has drawn in big investors such as Blackstone and Brookfield Asset Management Inc.
Manhattan, New York, office location of the Blackstone hedge fund in June 2016.
A Blackstone affiliate last summer agreed to buy a majority stake in eight student-housing properties for $784 million.
Nadeem Meghji, Blackstone's head of real estate for the Americas, said part of student housing's appeal is that it isn't as vulnerable to economic downturns as other sectors.
"We think student housing is a compelling sector because it's performed through cycles and has been really quite resilient over time," he said. He added that Blackstone plans to build new properties under ACC's platform to meet growing demand.
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"There is today a shortage of quality housing supply at many universities across the country," he said.
ACC owns 166 buildings in cities and college towns across the U.S., including properties near Arizona State University and the University of California in Berkeley. About a quarter of its properties are on campus.
Blackstone is taking the real-estate investment trust private through Blackstone Real Estate Income Trust Inc. and Blackstone Property Partners, which unlike its traditional private-equity funds can hold properties as long-term investments. The purchase price of $65.47 a share is about 14% above Monday's closing price.
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In a statement, ACC Chief Executive Bill Bayless said Blackstone's backing will allow the company to grow its business and expand its competitive advantage.