Acquisition of AIR Communities is Blackstone’s largest transaction in the multifamily market.
Blackstone has agreed to acquire an owner of upscale apartment buildings for about $10 billion, signaling that one of the world’s largest real estate investors is ramping up investments again after a period of moving more cautiously.
Blackstone is taking private Apartment Income REIT, known as AIR Communities, which owns 76 rental housing communities that are primarily in coastal markets, including Miami, Los Angeles, and Boston, the companies confirmed. Blackstone plans to invest another $400 million to improve these properties, the firm said.
The acquisition is Blackstone’s largest transaction in the multifamily market. It reflects the firm’s bullishness on rental housing and its belief that commercial real estate overall is bottoming and the time is ripe to step up investments.
“We can see the pillars of a real-estate recovery coming into place,” Blackstone President Jonathan Gray said on an earnings call earlier this year. “We are, of course, not waiting for the all-clear sign and believe the best investments are made during times of uncertainty.”
Blackstone posted lower quarterly earnings in January, and its profit was hit by a decline in the value of its real estate investments. The firm in recent months has begun to invest more aggressively in the commercial real estate market, betting that interest rates are stabilizing and access to capital is becoming easier.
Blackstone late last year acquired a stake in a $17 billion loan portfolio from the defunct Signature Bank. In December, Blackstone and Digital Realty agreed to create a new venture to develop $7 billion in data centers that will target the largest providers of online content, cloud services and artificial intelligence.
Earlier this year, Blackstone agreed to acquire Tricon Residential, which owns, operates and develops a portfolio of about 38,000 single-family rental homes in the U.S., for $3.5 billion.
The firm has agreed to acquire AIR Communities at $39.12 a share in an all-cash transaction, which represents a 25% premium to the company’s closing share price on Friday. Shares of AIR Communities rose more than 22 percent to $38.40 on Monday morning. Blackstone shares were up 1.65% to $129.69.
Blackstone is acquiring the firm through its $30.4 billion global real-estate fund, in a transaction valued at about $10 billion, including the assumption of debt. It is expected to close in the third quarter.
Blackstone considers multifamily, and rental housing in general, one of the best commercial property segments to invest in. While a crush of new supply, especially in the Sunbelt region, and higher interest rates have weighed on the multifamily business, the markets in AIR Communities portfolio have been less impacted.
