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Blackstone To Buy Apartment REIT For $10B

Blackstone is ramping up its multifamily investments with the $10B acquisition of Apartment Income REIT Corp. 

AIR Communities' portfolio includes the Flamingo South Beach at 1504 Bay Road in Miami Beach.

The private equity giant announced Monday that it would pay $39.12 per share in an all-cash transaction to acquire the publicly traded firm, also known as AIR Communities, at a 25% premium on the company's closing price Friday. Blackstone has agreed to assume all of AIR Communities’ debt along with its portfolio of 76 rental communities in 10 states and Washington, D.C.

Blackstone will take AIR Communities private and is planning to invest another $400M to maintain and improve the portfolio, which is concentrated in coastal markets like Miami, Los Angeles, Boston and D.C., according to a news release. 

“AIR Communities represents the highest quality, large scale apartment portfolio we have ever acquired, and is located in markets where multifamily fundamentals are strong,” Nadeem Meghji, global co-head of Blackstone Real Estate, said in a statement.  

The board of directors at AIR Communities unanimously approved the deal, which is expected to close in the third quarter. AIR Communities, which has a portfolio of 27,100 upscale apartments, has suspended quarterly dividend payouts while the transaction is pending. 

The acquisition announcement sent AIR Communities’ stock soaring more than 22% in early trading Monday.

“The transaction will strengthen the AIR mission to provide homes for others, be a great place to work, act as responsible stewards of AIR communities, and be a trusted partner to AIR investors,” AIR Communities CEO Terry Considine said in a statement. “The business the AIR team has built will be improved and expanded by collaboration with Blackstone.” 

A spokesperson for AIR Communities declined to comment further on the acquisition but said more details of the merger agreement were likely to be disclosed after markets close Monday. 

The acquisition comes as the multifamily market has proved resilient despite a wave of new supply coming online. 

RealPage updated its forecast for the sector last week “to reflect strengthening economic markers that influence the multifamily industry.” The firm now expects 12% of the nation’s 50 largest apartment markets to see rent growth at 3% or more, while only 8% of cities, or four markets, are forecast to see rent growth below 1%. 

Multifamily rents in March recorded their largest gain in 20 months, according to Yardi Matrix. Rent growth has slowed, with Yardi Matrix seeing rents decline in 13 of its top 30 metros in the year ending in March, but only four metros saw negative rent growth in the first quarter and only two were in negative territory for the month of March. 

“Multifamily’s March performance demonstrates resilience in the face of challenges,” Yardi Matrix analysts Paul Fiorilla and Brittney Peacock wrote in the firm’s March report. “Demand remains healthy as the economy continues to churn out jobs, with household growth boosted by strong wage growth and immigration.”

Meghji rose to co-head of real estate at Blackstone earlier this year, joining Kathleen McCarthy, who has been the other co-head since 2018. The pair told Bisnow in March that Blackstone’s coming real estate investments would be focused on rental housing, data centers, logistics, hospitality and student housing. 

In January, Blackstone reached a deal to pay around $3.5B to purchase Tricon Residential, which owns 38,000 single-family rental homes across the Sun Belt and has a $1B development pipeline. 

The firm’s flagship Blackstone Real Estate Income Trust has seen mixed results weathering the uncertainty in the commercial real estate landscape. 

BREIT fulfilled all of its redemption requests in February, a total of $961M, for the first time since November 2022 when it limited redemptions that went beyond contractual withdrawal limits. But Blackstone also disclosed this month that the $2.8B in dividends paid out through BREIT in 2023 exceeded the fund’s $2.7B in cash flow, the first time distributions went beyond income in the fund’s eight-year history. 

Blackstone is using its $30.4B Blackstone Real Estate Partners X fund to acquire AIR Communities, its largest apartment portfolio acquisition ever.

A Blackstone spokesperson said that the firm is going on offense because of what it sees as the bottoming out of real estate values, with $65B in capital to deploy.

CORRECTION, APRIL 9, 12:30 P.M. ET: A previous photo with this story was of a property AIR Communities manages but does not own. The photo has been replaced.