US private equity giant Blackstone snaps up student housing firm IQ in £4.7bn deal
Private equity giant Blackstone has snapped up a student housing firm for £4.7billion in one of the UK’s biggest ever property deals.
The US company is buying London-based IQ from Goldman Sachs and the Wellcome Trust as demand for university accommodation surges in response to the growing number of students.
Britain is the second-largest market for rooms outside North America, with about 140 universities attended by 2.4m undergraduates and post-graduates.
Blackstone is buying London-based IQ from Goldman Sachs and the Wellcome Trust as demand for university accommodation surges in response to the growing number of students
It has prompted estate agent Knight Frank to recently value the sector at a staggering £50billion.
IQ was started in 2006, with Wellcome as one of the founding investors, and merged with Goldman Sachs’ student housing business in 2016. It owns 28,000 beds and has another 4,000 more in the pipeline.
The takeover is thought to be the second-largest property deal ever in the UK, after the £5.8billion takeover of Songbird Estates in 2014, Goldman Sachs said.
James Seppala, head of Europe real estate at Blackstone, said: ‘British higher education is globally renowned and we are delighted to invest meaningful capital to support IQ’s further growth.’
Property firms have turned to Britain’s budding build-to-rent sector as traditional home building and selling falters.
Student housing is seen as particularly lucrative, with universities predicting an increase of around 171,000 attendees over the next four years.
That has prompted a string of deals, including IQ competitor Unite’s takeover of Liberty Living Group for £1.4billion last year.
The IQ sale comes after Blackstone said it would use cash from a £11billion Saudi-backed infrastructure fund to invest in Britain.
IQ’s portfolio is mainly in London, where it is the largest owner of student accommodation. It also owns sites in Manchester, Leeds, Sheffield, Edinburgh and Birmingham.
Its swish private rooms are a far cry from those that most graduates would have lived in during their university days.
Many have private bathrooms or kitchens, and facilities include gyms, games rooms, private cinemas and luxury community areas.
One ‘platinum’ studio in London was yesterday going for £2,752 per month. It includes a double bed, television, dining table and chairs, study desk, kitchenette with dishwasher, underfloor heating, wi-fi and bathroom.
Blackstone’s takeover of IQ is expected to give it even more financial firepower to expand.
Rob Roger, IQ chief executive, said: ‘With student numbers in the UK at an all-time high, and growth set to continue in the coming years, there has never been a more exciting time to be a leading player in the sector.’