Seems the largest-ever private real estate deal is about to take place in the United Kingdom. The deal involves Blackstone Group Inc (BX). acquiring the iQ Student Accommodation business from Goldman Sachs Group Inc. and the Wellcome Trust for $6 billion.
According to a statement from Goldman Sachs, the business owns and manages over 28,000 beds in the United Kingdom and the deal is expected to materialize after regulatory approval.
In the statement, Blackstone’s head of real estate in Europe, James Seppala said, “This acquisition is a continuation of our strategy to invest in high-quality assets and businesses in the U.K. and testament to our long-term belief in the U.K..”
This should be a good deal as the U.K. government revealed in 2019 that it plans to increase the number of students in the United Kingdom by over 30%. Overtime, Blackstone has become a professional in the real estate segment following its investment in the third student-housing business since 2006.
Bloomberg reports that the acquisition deal is the latest in a series of substantial U.K. real estate investments for the alternative asset manager that includes a large portfolio of railway arches and a low-income housing business.
An anonymous source familiar with the matter said, “Blackstone plans to invest heavily in the business, which has a development pipeline of about 4,000 beds. A substantial proportion of the 77 existing properties are also in need of refurbishment.”
While about 50% of Blackstone’s investments are located in London, others are located in cities and university towns that serve as homes to top academic institutions in the United Kingdom. Considering the population density on top universities, especially that of London, it then follows that the majority of iQ’s tenants are overseas students, one-third coming from the U.K and some others come from outside the European Union.
The source who anonymously gave out this secret information further disclosed that majority of Blackstone’s investment is being made on behalf of its10 billion-euro Blackstone Real Estate Partners, Europe VI fund and that the deal could serve as a basket of opportunities when the business decides to have an initial public offering later in the future when the funds are exhausted.
Charity foundation, Wellcome Trust was established with the legacies from the pharmaceutical magnate Sir Henry Wellcome. Sir Henry Wellcome was one of the founding investors of iQ in 2006. In 2016, the business went through a merger with Goldman Sachs’ student housing company.
The statement further revealed that the acquisition deal saw Goldman Sachs International, Morgan Stanley, and Eastdil Secured serving as advisers to Goldman Sachs’ merchant banking division and the Wellcome Trust on the sale; while Bank of America Corp., Citigroup Inc., and Savills Plc were the representatives of Blackstone in the acquisition deal.