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Alternative investment management company Blackstone is showing its faith in multifamily with the acquisition of an owner of upscale apartment buildings for $10 billion, The Wall Street Journal reported on Monday.
The acquired entity is Apartment Income REIT, also known as AIR Communities, an owner of 76 rental communities largely located in coastal markets, including Miami, Los Angeles and Boston. Blackstone reportedly intends to put another $400 million toward improving the properties.
The acquisition marks Blackstone’s largest in the multifamily sector and shows a bullishness in rental housing, as well as a mentality that the commercial market may be bottoming out.
“We can see the pillars of a real estate recovery coming into place,” Blackstone President Jonathan Gray said during an earnings call earlier in the year. “We are, of course, not waiting for the all-clear sign and believe the best investments are made during times of uncertainty.”
Blackstone is acquiring AIR Communities at $39.12 per share in an all-cash transaction, about a 25 percent premium on the company’s closing share price as of Friday. The acquisition is taking place through Blackstone’s $30.4 billion global real-estate fund and is expected to close in the third quarter.
The firm saw lower quarterly earnings in January with profits down as a result of declining values in its real estate investments. Net income was down to $151.8 million from $557.9 million the year before, and two of its main real estate investments had declined by 3.8 percent and 4.6 percent in value, respectively.
In recent months, Blackstone has started to ramp up investments in commercial real estate on the assumption that interest rates are likely stabilizing and capital is moving more freely.
In December 2023, the firm secured a nearly $17 billion Signature Bank portfolio. It also teamed up with Digital Realty around that time to establish a new venture to develop $7 billion in data centers that will target the largest providers of online content, cloud services and artificial intelligence.
Blackstone in January also announced its $3.5 billion acquisition of Tricon Residential, an owner, operator and developer of a portfolio of roughly 38,000 single-family rental homes in the United States.
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