Blackstone expands further into rental housing in US

Published Thu, Feb 17, 2022 · 08:01 AM

[NEW YORK] Private equity firm Blackstone, the largest owner of commercial real estate in the world, is expanding its portfolio of rental housing and commercial real estate in the United States.

The firm announced Wednesday (Feb 16) that it would spend roughly US$6 billion to acquire Preferred Apartment Communities, a real estate investment trust based in Atlanta that owns 44 multifamily communities and about 12,000 housing units in the South-east, mostly in Atlanta; Nashville, Tennessee; Charlotte, North Carolina; and the Florida cities of Jacksonville, Orlando and Tampa. Preferred also owns several retail and office properties.

Preferred's rental apartments accounted for roughly 70 per cent of the value of the deal, which is expected to close in the second quarter of this year.

The proposed acquisition is the latest sign of Blackstone's ambitions in real estate. The firm's investments in rental housing are a key way to offset the pressure of inflation, Blackstone's chair and CEO, Stephen A Schwarzman, and its president and chief operating officer, Jonathan Gray, said on an earnings call in late January.

The executives added that rents in the United States had been rising at 2 to 3 times the rate of inflation. Consumer prices increased 7.5 per cent in the year through January, the latest government report showed, with the cost of rent expected to rise this year, further fuelling inflation.

Real estate has become an increasingly critical part of Blackstone's performance. The firm generated nearly half its earnings in 2021 from real estate in what Schwarzman said were "the most remarkable results in our history on virtually every metric". Blackstone's shares have been on a run lately. Its stock is up roughly 80 per cent over the past 12 months. NYTIMES