Sale of More Than 10,000 Units Underscores Strong Investor Demand for Multifamily as Rents Continue to Rise
Avana At South Shore, a 316-unit apartment property in Prarie City, TX, is part of a 32-property multifamily portfolio being sold by Greystar to Blackstone.
In another vote of confidence in the continued strength of the nation’s red-hot apartment market, private equity kingpin The Blackstone Group LP has agreed to buy a 32-property portfolio of apartment properties from Greystar Real Estate Partners LLC for $2 billion, or $192,000 per unit.
The 10,399-unit portfolio being sold by one investment fund, Greystar Equity Partners VII, L.P. (GEP VII), to another, Blackstone Real Estate Partners VIII (BREP VII), is spread out across the U.S. with properties in California, New York, South Florida, Washington and other states.
The pending transaction is the latest move by Blackstone, which has become the preferred ‘exit strategy’ option for major real estate investors, one of the few major buyers with the real estate acumen and financial capacity to take out large real estate positions in quick fashion.
Blackstone’s domineering influence over the commercial property sector dates back to 2007 when it acquired what was at the time the largest office REIT, Equity Office Property Trust, for $39 billion in a deal that still stands as the CRE industry’s largest private buyout.
Earlier today, Blackstone extended its holdings in the hotel sector when the shareholders of Strategic Hotels & Resorts, Inc. (NYSE: BEE) approved the sale of the luxury hotel company to Blackstone in a deal valued at $6 billion. That transaction, first announced in September, involves 17 hotels with an aggregate of 7,921 rooms and is scheduled to close Dec. 11.
Last month, Blackstone deployed a portion of its mega real estate fund to recapitalize a 16-property multifamily portfolio encompassing 3,800 units and development sites located in Southern California, Colorado and Florida with New York-based Phoenix Realty Group (PRG).
And in October, Blackstone made perhaps its most audacious investment in the multifamily sector when it partnered with Ivanhoé Cambridge to acquire Stuyvesant Town-Peter Cooper Village, an 80-acre, 11,200-unit property in Manhattan.
That followed another Blackstone deal in January 2015 to acquire about 11,000 apartment units managed by Livcor, its Chicago-based portfolio company, from Praedium Group, a New York-based investment firm.
Now Blackstone is doubling down on the apartment sector with its latest deal. Interest was high among investors in the portfolio, which includes a mix of mid-rise, high-rise and garden-style apartment buildings, said Bob Faith, chairman and CEO of the Charleston, SC-based Greystar.
Greystar, the largest manager of apartments in the U.S., formed the GEP VII as part of a value-add acquisition fund series, focusing on apartment communities in major markets that presented the opportunity to increase occupancy and raise rents through operational improvements and capital renovations.
GEP VII closed the $600 million commingled fund in 2011 with commitments from a group of institutional investors. Greystar announced the final close of Greystar Equity Partners VIII, an $800 million successor fund that is now fully invested, in June 2014.
“We continue to believe in the long-term fundamentals of the multifamily industry given strong secular demand trends and barriers against widespread overdevelopment,” Greystar’s Faith said.
Founded in 1993, Greystar manages approximately 410,000 apartment units globally. The pending sale to Blackstone accounts for about 18% of the roughly 55,000 units the company owns. Holliday Fenoglio Fowler, L.P. (HFF) managed the competitive bid process on behalf of Greystar, which will continue to manage the units for Blackstone.
By Randyl Drummer