Blackstone Buys UK Student Housing Firm for $6B
The private equity firm agreed to buy iQ Student Accommodation, which owns and operates more than 28,000 beds.
iQ property in Manchester, UK. Image courtesy of iQ Student Accommodation
Blackstone has expanded its bet on student housing by agreeing to buy the UK’s iQ Student Accommodation from Goldman Sachs and Wellcome Trust for a record-breaking $6 billion (£4.7 billion). The transaction, said to be the largest private real estate deal in British history, will give Blackstone control of one of the leading providers of purpose-built student housing in the UK—the world’s second-biggest market for the asset class outside of North America.
The deal is subject to regulatory approval, according to an announcement by the firms on iQ’s corporate website. iQ owns and manages a 67-property portfolio of more than 28,000 beds across the UK and has more than 4,000 beds in its development pipeline. The firm was created in 2006 with British research charity Wellcome Trust as a founding investor and merged with Goldman Sachs’ student housing business Prodigy Living in 2016.
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The company is the largest owner of student accommodation in London, where 52 percent of its portfolio is located, and has a significant presence in the cities of Manchester, Leeds, Sheffield, Edinburgh and Birmingham. Each property features 24/7, on-site staff and security, a common area and all-inclusive utilities and WiFi. Many of the communities also come with amenities such as a fitness center, cinema and entertainment lounge.
Residences include private studios as well as en suite units with private rooms. Rents for available units in iQ’s community within the City of London range from $402 to $561(£315 to £505) per week, the company’s website shows, while its property near Bangor University in Bangor, Wales, offers rents ranging from $130 to $292 (£101 to £227) per week.
Betting on British beds
Many investors find promise in the UK’s purpose-built student housing market, which is estimated to be valued at more than $65 billion, according to a Knight Frank report released last year. Full-time students outnumber available beds in the UK by three to one, and the brokerage projected that full-time undergraduate numbers will rise by 15 percent between 2019 and 2030, an increase of 222,000 to more than 1.7 million students.
The landmark deal for iQ comes after Blackstone Real Estate Income Trust bought up EdR’s portfolio of 10,500 beds in the U.S. for $1.2 billion in June 2018. In September of last year, U.S. real estate investment firm CA Ventures ventured into the European market by investing a planned $625 million (£500 million) per year to develop purpose-built student accommodation in the UK and Ireland by 2021.
