Your new college landlord could be on Wall Street

Blackstone revealed on Tuesday that it has agreed to buy the student-housing company American Campus Communities (ACC) for $12.8 billion.

The all-cash deal, which is being done through the $97 billion Blackstone Real Estate Income Trust (BREIT), is for $65.47 per share, representing a nearly 14% premium over the closing price of ACC’s stock on Monday.

American Campus Communities bills itself as the nation’s largest developer, owner, and manager of student housing. As of the end of 2021, it owned 112,000 beds on 71 campuses, including Arizona State University and the University of Texas at Austin, SEC filings show. 

“American Campus Communities has a best-in-class portfolio and platform, built on long-standing relationships with some of the most distinguished and fastest-growing universities in the country,” Jacob Werner, cohead of Americas acquisitions for Blackstone Real Estate, said in a statement.

With the ACC deal, Blackstone is trying to take advantage of the growing student housing market, following up on its $784 million joint venture to buy eight student-housing properties with Landmark Properties last year.

The student housing market took a hit during the pandemic as total enrollment in U.S. Universities dropped over 5% in 2020 and 2021 combined, according to the National Student Clearinghouse Research Center. But the campus housing market is expected to rebound over the next decade, with the number of beds growing to 9.2 million by 2031 from 8.5 million in 2020, according to the National Multifamily Housing Council.

The average rent per bedroom for student housing is also accelerating as students head back to in-person classes, jumping 2.2% year over year in December, compared with a 0.9% gain in 2020, data from real estate research company Yardi shows.

“We think student housing is a compelling sector because it’s performed through cycles and has been really quite resilient over time,” Nadeem Meghji, Blackstone’s head of real estate for the Americas, told the Wall Street Journal on Tuesday. “There is today a shortage of quality housing supply at many universities across the country.” 

Blackstone, like other private equity firms, has also expanded into single-family rentals in recent years. The company agreed to buy the home rental company Home Partners of America for $6 billion last year, adding roughly 17,000 units to its holdings. And this year, it added another 12,000 units by paying $5.8 billion for the Preferred Apartment Communities Real Estate Investment Trust (REIT).

Blackstone, which manages over $880 billion in assets, was already the world’s biggest corporate landlord. But with commercial real estate running into problems in the post-pandemic, work-from-home world, the company’s management is looking to the residential sector.