Blackstone Group LP (BX:US) agreed to buy 80 apartment properties for about $2.7 billion in one of its largest forays into the U.S. multifamily market, a person with knowledge of the deal said.
The biggest manager of private-equity real estate funds is acquiring the properties from General Electric Co. (GE:US)’s GE Capital unit, said the person, who asked not to be identified because the transaction isn’t public. GE has been paring its property holdings as part of a strategy to shrink its finance division.
Surging rental demand has sent U.S. apartment vacancies to the lowest level in a decade, according to Reis Inc. (REIS:US) In residential real estate, New York-based Blackstone has focused on buying single-family homes to rent, spending more than $5 billion to acquire more than 30,000 U.S. houses in the aftermath of the foreclosure crisis.
The firm’s latest purchase comes as apartment stocks, one of the best performers among commercial-property types since the credit crisis, have fallen from their highs. The Bloomberg Apartment Real Estate Investment Trust Index has declined 1.4 percent in the 12 months through yesterday, compared with a gain of 9.6 percent for the broader Bloomberg REIT Index and a 23 percent return for the Standard & Poor’s 500 Index, after the reinvestment of dividends.
Blackstone had been in talks in 2011 to buy all or parts of Archstone, the U.S. apartment landlord that ultimately was sold by Lehman Brothers Holdings Inc. to Equity Residential (EQR:US) and AvalonBay Communities Inc. (AVB:US)
Carlyle Group LP, the second-largest private-equity firm by assets, has been one of the most active buyout companies in the apartment market. The Washington-based company has invested about $2.8 billion since late 2008 to bet on the broader housing recovery, including purchases of residential mortgage-backed securities.
Blackstone is stepping up wagers on apartments as it sells its biggest hotel, office and retail holdings. The company has filed for initial public offerings of its Brixmor Property Group shopping center unit and Extended Stay America hotel chain. It hired bankers for an IPO of Hilton Worldwide Inc. and possible IPO or sale of its La Quinta limited-service hotels, people with knowledge of the plans have said.
Blackstone is the largest owner of hotel rooms in the country, and the second-biggest owner of office buildings, according to National Real Estate Investor. The firm also is a major holder of industrial and retail assets.
Christine Anderson, a spokeswoman for Blackstone, and Patrick Brennan, a GE Capital spokesman, declined to comment. The deal was reported yesterday by the Wall Street Journal.
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