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KKR Strikes $725 Million Deal to Sell Student-Housing Properties

The price for the portfolio, with seven properties and 4,500 beds, is $725 million. Harrison Street is the buyer.

(Bloomberg)—KKR & Co. has sold seven US student-housing properties to Harrison Street, a deal that shows continued strength for the sector even as other residential and commercial real estate markets cool.

The price for the portfolio, with 4,500 beds, was $725 million, according to people with knowledge of the deal. Representatives for KKR and Harrison Street declined to comment.

Compared with apartments, student housing offers higher returns as measured by capitalization rates, according to MSCI Real Assets.

“As cap rates of traditional multifamily assets push to new record lows, the relative yield opportunity offered by student housing may further pique investor interest,” the real estate information service said in a June 22 report.

US student housing deal volume jumped 121% in the first quarter from a year earlier to $2.4 billion, according to MSCI. Then in April, Blackstone Inc. agreed to pay $12.8 billion for American Campus Communities Inc., which says it’s the largest college-housing landlord with 111,900 beds. That transaction is scheduled to close in September.

Commercial real estate deals in general slowed in May after a record start to the year as rising interest rates and inflation led to a cooling of prices, according to MSCI.

Harrison Street is one of the largest US student-housing landlords, with a portfolio of 97,000 beds valued at $11.8 billion as of March 31. It has been an active trader, selling two portfolios in November valued at $1.9 billion.

KKR, the private equity giant with $479 billion in assets, has acquired 10,000 student-housing beds for $1.2 billion since 2016. It manages student housing through its portfolio firm, University Partners, which runs dorms mostly at growing public colleges.

To contact the author of this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net.

© 2022 Bloomberg L.P.

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