Blackstone continues making major deals across the multifamily sector by planning to acquire Bluerock Residential Growth REIT in an all-cash transaction valuing the REIT at $3.6 billion.
Under the terms of the transaction, expected to close in the second quarter of 2022, Blackstone will acquire 30 multifamily properties with approximately 11,000 units and a loan book secured by 24 multifamily assets. The properties are high-quality, garden-style assets located mainly in Atlanta; Phoenix; Denver; Orlando, Fla.; and Austin, Texas. Most of the assets were built around 2000 and include significant green space and resort-style amenities.
Prior to the acquisition by affiliates of Blackstone Real Estate, BRG intends to spin off its single-family rental business to its shareholders in a new REIT to be named Bluerock Homes Trust Inc. BHOM will be externally managed by an affiliate of Bluerock Real Estate and will own interests in about 3,400 homes, including 2,000 through preferred/mezzanine investments. The SFR properties are located in fast-growing, high quality of life and knowledge economy markets across the United States.
Completion of the Blackstone acquisition is contingent upon the spin-off being done prior to the closing. Most of BRG’s senior management, along with certain entities related to them, agreed to retain their interests in the BRG operating partnership rather than receive cash consideration. The operating partnership will hold SFR assets upon completion of the spin-off. The definitive agreement announced Monday calls for Blackstone to acquire all outstanding shares of BRG for $24.25 per share. The BRG shareholders will receive shares of BHOM, with a current implied Net Asset Value estimated at $5.60. Excluding the BHOM value, the acquisition represents a premium of about 124 percent over the closing stock price on Sept. 15, the date before Bloomberg News reported BRG was exploring strategic options including a possible sale.
Ramin Kamfar, BRG chairman & CEO, said in a prepared statement the transaction would deliver tremendous value to the shareholders. He said the substantial premium is a testament to the REIT’s success in building a best-in-class institutional-quality multifamily portfolio in attractive knowledge-economy target markets.
Morgan Stanley & Co. LLC and Eastdil Secured LLC are BRG’s lead financial advisors with BofA Securities also acting as an advisor. Wachtell, Lipton, Rosen & Katz, Kaplan Voekler Cunningham & Frank PLC, and Vinson & Elkins LLP, are BRG’s legal counsel. Barclays and Wells Fargo Securities LLC are Blackstone’s financial advisors and Simpson Thacher & Bartlett LLP is Blackstone’s legal advisor.
In recent months, private equity giant Blackstone has been investing in a diversified mix of rental assets across the U.S., including two multi-billion dollar deals. The largest was the $6 billion paid for single-family housing provider Home Partners of America in June. The company owned more than 17,000 homes across 74 metros, expanding Blackstone’s investments in the growing SFR market.
In July, Blackstone announced was acquiring AIG’s interest in a multifamily portfolio with 678 communities and approximately 83,000 apartments primarily in suburban garden-style properties, also in high growth markets including Austin, Dallas, Denver and Phoenix.
Some of those properties were in Seattle, where Blackstone paid Greystar $302.8 million for 432 units across two assets in August. Ascent South Lake Union had 251 units and Marlow had 181 and were built in 2018 and 2019, respectively.
Also in August, Blackstone Real Estate Income Trust Inc., a Blackstone affiliate, entered into a $784 million joint venture with student housing developer and owner-operator Landmark Properties to purchase eight student housing properties totaling 5,416 beds across the U.S.