Blackstone Expands Affordable Housing Presence

The firm will acquire AIG’s interest in a portfolio totaling 83,000 units across the U.S.
Photo by Nathan Van Egmond on Unsplash

Blackstone has expanded its U.S. affordable housing footprint after acquiring AIG’s interest in a portfolio that includes 678 communities. Blackstone Real Estate Income Trust acquired the company’s share of an affordable housing portfolio for approximately $5.1 billion. The all cash transaction is subject to closing conditions and is expected to close in the fourth quarter of this year.

Peter Zaffino, AIG’s president & CEO, said in prepared remarks that the company built up its affordable housing portfolio over the course of more than 30 years. Zaffino added in his prepared statement that the communities were attractive investments but were no longer core to AIG’s long-term investment strategy.

The affordable housing portfolio totals approximately 83,000 apartments primarily in suburban garden-style properties. The portfolio stretches across the U.S. but is concentrated in high growth markets across 42 states including metros like Austin, Dallas, Denver, Los Angeles, Phoenix, Seattle, the San Francisco Bay Area and the Washington, D.C. and Northern Virginia area. Blackstone REIT also recently acquired an SFR firm with a portfolio of more than 17,000 homes across 74 metros in the U.S.

The new ownership is planning to make significant investments to improve the communities from AIG’s portfolio, while keeping them affordable and in compliance with all rent regulations, Kathleen McCarthy, global co-head of Blackstone Real Estate, said in prepared remarks.

STARTING A STRATEGIC PARTNERSHIP

Outside the Blackstone acquisition of AIG’s affordable housing portfolio, Blackstone will also acquire a 9.9 percent equity stake in AIG’s Life & Retirement business for $2.2 billion in another all cash transaction. Alongside the acquisition, Blackstone will start a strategic partnership with AIG where Blackstone will manage an initial $50 billion of Life & Retirement’s existing investment portfolio—an amount that will increase to $92.5 billion over the next six years.

The transactions are subject to closing conditions and are expected to close by the end of the third quarter of 2021. Once the transactions close, Blackstone’s president & COO Jon Gray will join AIG’s Life & Retirement board of directors.