Blackstone to Acquire Apartment Income REIT for $10 Billion
Blackstone, a prominent asset manager, announced Monday its intention to acquire Apartment Income REIT, also known as AIR Communities, for $10 billion in cash, including debt. This acquisition underscores Blackstone's strategic focus on rental housing, particularly amidst expectations of a decline in apartment supply in the United States due to a slowdown in construction.
The deal's key details include:
Acquisition Price: Blackstone will pay $39.12 for each share of AIR Communities, representing a premium of approximately 25% to its closing price on the preceding Friday. The substantial premium caused the REIT's shares to surge by about 23%.
Strategic Focus on Rental Housing: Blackstone, recognised as a top real estate investor, has been increasingly prioritising investments in rental housing. Given the projected decrease in apartment supply in the United States, Blackstone expects rental growth.
Strong Fundamentals of AIR Communities: AIR Communities boasts a diversified portfolio with apartments in both Eastern and Western coastal markets, which has shielded it from the pressures experienced by other rental housing providers. The firm reported a 6.2% increase in same-store rental revenue in the fourth quarter, surpassing comparable publicly listed REIT growth rates.
Investment Plans: Blackstone intends to invest an additional $400 million to enhance AIR Communities' 76 rental housing communities. This investment aligns with Blackstone's strategy to optimise the performance of its real estate assets.
Performance and Portfolio Value: Blackstone's flagship Blackstone Real Estate Income Trust has demonstrated strong performance, outperforming non-listed peers by 600 basis points in 2023. With a real estate portfolio valued at $586 billion, Blackstone continues to expand its rental housing market presence.
Previous Acquisition: In January, Blackstone agreed to acquire Tricon Residential, a Canadian single-family rental housing firm, further solidifying its position in the rental housing sector.
Overall, Blackstone's acquisition of AIR Communities reflects its confidence in the long-term prospects of the rental housing market and its commitment to strategic investments in high-quality real estate assets.