US buyout firms eye apartment Reits

New York

BUYOUT firms are apartment hunting again. An affiliate of private equity firm Lone Star Funds agreed this week to acquire apartment real estate investment trust (Reit) Home Properties Inc for about US$7.6 billion including debt. It marks the largest takeover of a US apartment Reit since the buyout boom of 2007, and more may be on the way.

Apartments are now one of the best-performing segments of the real estate market as younger tenants put off home ownership, driving near-record occupancy and rising rents. While property values have soared, some Reits are still trading below their net asset value.