Blackstone Bets Big on U.K. Student Housing, Acquiring IQ for $3.6 Billion
February 26 2020 - 7:59AM
Dow Jones News
By Ben Dummett
Blackstone Group Inc. agreed Wednesday to acquire IQ Student
Accommodation from a group led by Goldman Sachs Group Inc. for
GBP4.66 billion ($3.60 billion) including debt, the latest bet by
the U.S. buyout giant on the growth of student housing in the
U.K.
More generally, the deal is an endorsement of Britain's economy
as its government faces the challenge of reaching a new trade deal
with the European Union by the end of the year following the U.K.'s
split from the bloc last month. It is also an early but significant
sign of a rebound in European deal-making this year despite a
global slowdown.
Following 2019's steep decline in activity against a backdrop of
political uncertainty and worries over economic growth, deal
activity in Europe so far this year is up 16% to $94 billion,
compared with a 40% drop globally to $359.3 billion, according to
Dealogic.
IQ is one of the U.K.'s largest owners of student housing,
overseeing more than 28,000 beds in facilities located in some of
the country's major university cities, including London, where the
portfolio is concentrated, Manchester, Leeds, Sheffield, Edinburgh
and Birmingham.
Britain's education system is already among the country's most
lucrative sources of revenue and Blackstone's deal for IQ is a bet
on that growth continuing.
U.K. revenue from international students and other
education-related services totaled about GBP21.4 billion in 2017,
the bulk of which was generated by higher education, according to a
2019 report from the U.K. Department for Education. The total was
up 7.2% from the prior year and had gained 34.7% since 2010,
measured in current prices.
"There is very significant demand for British higher education,
both from domestic and international students, and that is
translating and should continue to translate into increasing
requirements for student housing," said James Seppala, Blackstone's
head of real estate for Europe.
Blackstone already knows the U.K. student housing market. In
2005, the New York-based firm launched the Nido student business in
London, subsequently selling it in 2012. Then, in 2017, Blackstone
sold its London-based Victoria Hall student-housing business.
Blackstone is acquiring IQ from Goldman Sachs' merchant bank
division, which owns 72% of the operation and its partner Wellcome
Trust, a London-based charitable foundation, owner of the remaining
stake.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
February 26, 2020 07:44 ET (12:44 GMT)
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