Dive Brief:

• New York City-based investment manager Blackstone and Denver-based Apartment Income REIT Corp. announced in a news release that they have entered into an agreement where Blackstone Real Estate Partners X will acquire all outstanding common shares of AIR for approximately $10 billion, including the assumption of debt.
• Blackstone, the largest owner of commercial real estate globally, is buying AIR for $39.12 per share, a 25% premium on its closing price on the New York Stock Exchange on April 5, 2024, the last trading day before the transaction's announcement.
• AIR owns 27,010 units across 76 rental housing communities, concentrated primarily in coastal markets including Miami, Los Angeles, Boston and Washington, D.C. Blackstone intends to invest more than $400 million in those properties to maintain and improve them. It may also invest additional capital to fund further growth.

Dive Insight:

Blackstone, which has $337 billion of investor capital under management in the U.S., was an active buyer through its Blackstone Real Estate Income Trust before high-interest rates froze the transaction market. 

The firm has bought several apartment firms, including Austin, Texas-based student housing REIT American Campus Communities for $13 billion in August 2022, Atlanta-based Preferred Apartment Communities for $5.8 billion in June 2022 and Philadelphia-based Resource REIT for $3.7 billion in January 2022.

However, Nadeem Meghji, global co-head of Blackstone Real Estate, said in a news release that AIR's portfolio stands out.

“AIR Communities represents the highest-quality, large-scale apartment portfolio we have ever acquired and is located in markets with strong multifamily fundamentals,” Meghji said. 

AIR has been operating as an independent entity since 2020 after being spun off from Aimco, a Denver-based company that had once been one of the largest apartment owners in the country. Terry Considine, founder, chairman and CEO of Aimco, became CEO and director of AIR after the separation.

In a statement, Considine said the Blackstone transaction would “strengthen the AIR mission to provide homes for others, be a great place to work, act as responsible stewards of AIR communities and be a trusted partner to AIR investors.”

“The business the AIR team has built will be improved and expanded by collaboration with Blackstone and a shared focus on serving residents and investing wisely,” he said.

More deals on the way

The slow apartment transaction market has largely been devoid of merger-and-acquisition activity over the last 16 months, according to a report that data firm MSCI Real Assets shared with Multifamily Dive. These transactions can add billions of dollars to monthly sales totals.

Jim Costello, co-head of MSCI’s real-assets research team, told Multifamily Dive that the industry has gone through similar stretches, including 2019 through the worst of COVID-19 and the global financial crisis, without entity-level deals.

“It [the Blackstone-AIR deal] does make me wonder if it shows that we are through the worst shocks from the COVID crisis,” Costello said. “The crisis hit around March 13th of 2020 and we have still been dealing with the aftershocks until recently.”

After the Blackstone-AIR union, the climate could be ripe for more deals, according to Jay Parsons, a rental housing economist.

“The public markets have undervalued apartments relative to the private sector, so Blackstone likely saw this as an opportunity to take advantage of an inefficiency,” Parsons told Multifamily Dive. “It's a big bet – and one that could push other institutions to move off the sidelines.”

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