Blackstone US$10 billion deal is latest bet on property

Blackstone struck a roughly US$10 billion deal for an apartment landlord in the latest sign that the real estate investor sees a ripe moment to pour money into the property market. 

Blackstone agreed to acquire Apartment Income Reit, known as Air Communities, in an all-cash deal for US$39.12 a share, according to a statement on Monday (Apr 8). That’s a 25 per cent premium from the company’s share price of US$31.35 at the close of trading on April 5.

The asset manager plans to invest more than US$400 million to maintain and bolster the company’s apartment portfolio. Blackstone Real Estate Partners X, a fund that raised more than US$30 billion, will purchase the shares. 

The Air Communities acquisition is Blackstone’s latest housing bet, following its US$3.5 billion agreement to take single-family landlord Tricon private earlier this year. The company is stepping up its hunt for deals as prices fall in commercial property markets, with President Jon Gray telling investors the firm believes “real estate values are bottoming.”

“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 the statement.

AIR Communities, based in Denver, has a portfolio of 76 apartment communities marketed to high-end renters, with concentrated holdings in Miami, Washington and other large markets. The average household income of the company’s tenants was US$237,000 in 2023, with average revenue of more than US$2,700 per unit, according to a presentation.

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The apartment market has come under pressure in recent months as owners confront higher borrowing costs and falling valuations. Prices of those buildings in the past 12 months through March have dropped 8 per cent, according to real estate analytics firm Green Street. 

The deal is expected to close in the third quarter, according to the statement. The Wall Street Journal earlier reported the deal. BLOOMBERG