Blackstone to Buy U.K. Dorms From Goldman Sachs in a $6 Billion Deal
- Posted on February 26, 2020
- Editors Pick
- By Lucia
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.
Be the first to comment!
You must login to comment