Blackstone Makes Major Expansion of Rental Housing Portfolio

The private equity firm acquired Preferred Apartment Communities in an all-cash transaction for $25 per share, valued at $5.8 billion.

Private equity firm Blackstone announced on Wednesday a sizable expansion of its rental property holdings with the acquisition of Preferred Apartment Communities, a real estate trust based in Atlanta.

Blackstone said it acquired Preferred through an all-cash transaction of $25 per share, valued at $5.8 billion, giving it control of the 44 multifamily communities containing roughly 12,000 rental units formerly controlled by Preferred in Atlanta, Orlando, Tampa, Jacksonville, Charlotte and Nashville, as well as several retail and office properties controlled by the company.

“We are pleased to acquire Preferred Apartment Communities and its portfolio of high-quality multifamily assets in key Sun Belt markets, which represents a significant majority of the company’s value,” Jacob Werner, c0-head of Americas acquisitions for Blackstone Real Estate, said in a statement. “Investing using [Blackstone Real Estate Income Trust’s] perpetual capital will enable us to be long-term owners of these vibrant communities.”

Blackstone, the biggest holder of commercial real estate in the United States, is among the Wall Street players who have added residential real estate to their holdings in recent years. The firm owns the Stuyvesant Town apartment complex in Manhattan, one of New York’s biggest. Its ownership has not been without controversy: In 2019, it was accused of warehousing rent-controlled apartments after paying $5.3 billion for the complex.

Blackstone’s latest deal illustrates the zeal some investors have for rental properties right now, which some see as a sound investment with rents rising at two or three times the rate of inflation in the U.S.

Real estate has become an increasingly important part of Blackstone’s portfolio, with its property holdings accounting for nearly half of its earnings in 2021. Its real estate investments appreciated by 11 percent in 2021, the firm said in its most recent earnings report. 

Investors buying single-family homes for rental purposes has become increasingly commonplace amid surging home values. A recent report from online brokerage Redfin found that investors bought a record 18.4 percent of homes in the U.S. during the fourth quarter of 2021, with the biggest share being in Atlanta, Charlotte and Jacksonville.

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