Blackstone is finalizing a deal to buy a New York apartment complex for $620 million with funds from a nearly $12 billion open-ended fund the firm manages.
The US’s biggest landlord is acquiring Kips Bay Court (pictured), an 894-unit complex on Manhattan’s eastern side, from its original developer, Phipps Houses. A spokeswoman for Blackstone declined to comment, but PERE understands that the firm expects to close on the deal in the next week.
Sources with knowledge of the acquisition said capital for the purchase comes from Blackstone Property Partners, the firm’s open-ended, core-plus fund that had $11.9 billion in committed capital as of June 30, according to the firm’s second-quarter earnings.
BPP had a 15 percent net internal rate of return as of June 30. One major investor in the fund is the California State Teachers’ Retirement System, which allocated $500 million, according to PERE research.
Phipps Houses built Kips Bay Court on Second Avenue between East 26th Street and East 29th Street in 1975 as an affordable housing project. The eight-building complex has about 40 percent of residents living in federally-subsidized units that give the property owner nearly market-rate rents, according to The Real Deal, a New York City real estate publication that first reported the deal Wednesday.
Kips Bay Court is less than a mile from Stuyvesant Town, the 80-acre multifamily complex Blackstone purchased for $5.3 billion with Ivanhoé Cambridge in October, also using capital from BPP.
When the duo bought Stuy Town, home to 30,000 New Yorkers and just south of Kips Bay Court, they agreed to keep 5,000 apartments affordable for at least 20 years in return for about $225 million worth of benefits from the city, PERE previously reported. About half of Stuy Town’s 11,200 apartments are currently market-rate.