Making a bet on student housing as colleges continue to reopen following the Covid-19 pandemic, Blackstone Inc. (BX, Financial) announced on Tuesday that it is acquiring American Campus Communities Inc. (ACC, Financial) in a deal valued at $12.8 billion including debt.
According to the terms of the all-cash agreement, the New York-based alternative asset management company will pay $65.47 per share for American Campus Communities, which is a 14% premium to its closing price on Monday.
The Austin, Texas-based real estate investment trust, one of the nation’s largest developers, owners and managers of high-quality student housing, owns 166 properties across 71 university markets that include the University of Texas at Austin, Florida State University, Arizona State University and the University of California-Berkeley. Following the close of the transaction, it will be taken private through Blackstone Real Estate Income Trust Inc. and Blackstone Property Partners.
CNBC reported merger and acquisition activity in the real estate sector reached a record high in 2021 on the back of cheap capital from low interest rates, a strong U.S. housing market and an economic recovery from the pandemic. Blackstone has been taking advantage of this trend as it inked another deal in December, buying Bluerock Residential Growth REIT Inc. (BRG, Financial) for $3.6 billion.
In a statement, American Campus Communities co-founder and CEO Bill Bayless highlighted some of the benefits of the deal as the company continues its “pioneering quest to transform the student housing sector into a mainstream, institutional asset class within the commercial real estate sector.”
“This announcement represents the culmination of the passion and dedicated service of the ACC team to our student residents and university partners, while creating significant value for our shareholders,” he said.
Bayless noted it also positions the company to further expand its competitive advantage within the student housing industry.
“Blackstone’s expertise, resources and consistent access to capital will allow us to rapidly leverage our platform and core competencies to entrepreneurially grow our core business and to pursue additional innovative opportunities,” he said. “Moving forward together, the combined synergies of our organizations will enable us to better serve our current and future residents and university partners.”
In February, the REIT reported its fourth-quarter and full-year 2021 results. For the three months ended Dec. 31, it posted earnings of 29 cents per share on $272 million in revenue, both of which were up from the prior-year quarter.
For the year, it recorded earnings of 24 cents per share on $942.9 million in revenue. While revenue was up from 2020, earnings declined.
Jacob Werner, the co-head of Americas Acquisition at Blackstone Real Estate, also lauded American Campus Communities’ “best-in-class portfolio and platform.”
“Our perpetual capital will enable ACC to invest in its existing assets and create much-needed new housing in university markets,” he said. “We’re excited to work with the ACC team to deliver communities where students love living.”
Following the announcement, shares of the REIT popped nearly 13% to $64.81. Blackstone shares also rose 1.33% to $113.48 on Tuesday morning.
Year to date, Blackstone shares have tumbled 10.34%, while American Campus has gained 13.16%.
The deal is expected to close in the third quarter of this year, dependent upon the approval of shareholders and regulators.
According to 13F filings, gurus who also saw value in American Campus Communities as of the end of fourth-quarter 2021 included Barrow, Hanley, Mewhinney & Strauss, Chris Davis (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Ron Baron (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).
