Equity Residential to buy $964M Portfolio from Blackstone

A major player in the U.S. apartment market has agreed to a $1 billion deal to boost its multifamily portfolio and expand its holdings in high-growth markets.

Equity Residential will acquire 11 apartment complexes with more than 3,500 units for $964 million, making it the largest multifamily purchase by a public REIT in the U.S. in the last seven years, the Wall Street Journal reported.

The complexes, previously owned by Blackstone, include garden apartments and various types of rental units in Atlanta, Denver, and the Dallas/Fort Worth area.

Blackstone, a leading investment firm led by Stephen Schwarzman, is selling the properties as part of a strategy to return capital to its investors. The transaction comes on the heels of the firm’s recent $10 billion acquisition of Apartment Income REIT, which focuses on upscale apartments.

The properties included in the deal are held in three separate funds managed by Blacksone: Blackstone Real Estate Income Trust, Blackstone Real Estate Partners and Blackstone Property Partners.

Equity Residential’s decision to buy the 11 apartment complexes was driven by its strategic locations in rapidly growing markets.

The complexes, which are about eight years old on average, were priced attractively compared to the cost of developing new properties, Equity Residential CIO Alec Brackenridge said.

The deal is anticipated to close in the third quarter of 2024 and follows other big transactions in the apartment sector this year, including KKR’s purchase of over 5,200 units for $2.1 billion and Brookfield’s acquisition of 7,000 units for $1.55 billion.

The apartment market has faced several significant struggles in recent years. High interest rates have increased borrowing costs, putting pressure on investors and developers. At the same time, a surge in new construction has led to an oversupply in many areas, further dampening rental prices and affecting property values. Many apartment owners have struggled to raise rents amid the influx of development, which has intensified competition and reduced rental income.

— Andrew Terrell