Blackstone buys giant US apartment portfolio for $2bn

The private equity giant is purchasing 10,399 multifamily units from Greystar through BREP VIII.

The Blackstone Group, the country’s biggest private landlord, is giving its US multifamily platform a major boost with the $2 billion acquisition of a 10,399-unit apartment portfolio from Greystar Real Estate Partners, the firms announced Tuesday.

The portfolio comprises 32 Class A and B apartment properties across the country, with varied types of buildings from Seattle to Boston. About 65 percent of the properties are in gateway markets and the remainder are in growth markets, including Dallas and Atlanta, Greystar said. HFF brokered the sale.

The transaction comes as New York-based Blackstone has continued increasing its US multifamily real estate footprint this year. In October, the private equity giant partnered with Ivanhoé Cambridge to buy Manhattan’s Stuyvesant Town-Peter Cooper Village, an 80-acre, 11,200-unit property. In January, Blackstone agreed to purchase an 11,000-unit apartment portfolio across the US for about $1.7 billion from New York-based real estate investment firm Praedium Group – its first major multifamily deal since launching the sector-focused platform in 2013.

For its latest acquisition, Blackstone used capital from Blackstone Real Estate Partners VIII, a $15.8 billion opportunistic fund that closed in October. Major investors include the South Dakota Investment Council, which allocated $334 million; and Teachers’ Retirement System of the State of Illinois, the Teacher Retirement System of Texas, the Pennsylvania Public School Employees’ Retirement System and the New York State Common Retirement Fund, all of which committed $300 million each, according to PERE Research & Analytics.

Greystar, a private equity real estate firm based in Charleston, South Carolina, assembled the properties from 2011 to 2013 through Greystar Equity Partners VII (GEP VII), a $600 million value-add fund. After this sale, the vehicle is fully liquidated. Investors in GEP VII included the Ohio Police and Fire Pension Fund, which allocated $35 million; the Kansas Public Employees’ Retirement System, which committed $30 million; and the Chicago Teachers’ Pension Fund, which allocated $25 million, according to PERE Research & Analytics. The firm held a final close for the fund in 2011.

The sale is “exactly in line with doing what we’ve done with the Greystar Equity Partners fund series,” Greystar’s founder and chairman Bob Faith told PERE. “What makes this unique and different is that we’re selling in one fell swoop through a portfolio this time.”

Faith said Blackstone has the potential to reposition some of the assets as leases roll over, and consequently achieve higher occupancies and rental rates.

Greystar will continue to be the property manager for the portfolio. Faith said the firm operates a number of other properties on behalf of Blackstone.

A spokeswoman for Blackstone declined to comment. The firm’s Chicago-based multifamily arm, LivCor, oversees about 35,000 units across the country.