Equity Residential selling portfolio to Goldman-led JV for $1.5bn

The Sam Zell-led REIT is selling 27 multifamily properties across the US to a venture between Goldman’s REPIA and Greystar Real Estate Partners.

Following its purchase of a portion of Archstone’s assets, Equity Residential is selling a portfolio of 27 multifamily properties to a joint venture led by Goldman Sachs for $1.5 billion. 

The Chicago-based REIT, which is led by Sam Zell, has entered into an agreement to sell a portfolio of multifamily assets to a joint venture between Goldman Sachs’ Real Estate Principal Investment Area (REPIA) and Charleston, South Carolina-based multifamily manager Greystar Real Estate Partners. The transaction, which values the 27 properties at approximately $187,000 per unit, is the latest deal in a series of joint investments by Goldman and Greystar. 

Under the terms of the agreement, Equity Residential has granted the venture the right to exclude up to eight percent of the value of these assets from the purchase. As a result, REPIA and Greystar have the right to acquire all of the assets for $1.5 billion, but the partners are obligated to purchase no less than $1.38 billion in assets. The venture has made an escrow deposit of $150 million and has waived its due diligence contingency. 

“With this transaction, we will have made significant progress selling assets in our exit markets and non-core assets in primary markets to fund our share of the acquisition of Archstone,” said David Neithercut, Equity Residential’s president and chief executive officer, in a statement. 

In November, it was announced that Equity Residential and AvalonBay Communities bought Archstone from the estate of Lehman Brothers Holdings for $6.5 billion. Equity Residential will acquire around 60 percent of Archstone's assets and liabilities, while AvalonBay will acquire roughly 40 percent. The deal is expected to close in the first quarter.

“This transaction fits with our investment strategy to acquire assets with strong existing cash flows at values below replacement cost, located in markets with high employment and population growth,” added Greystar’s chief executive Bob Faith. 

The 27 assets under contract are located in New Jersey, Florida, Southern California, the San Francisco Bay Area, Washington DC, Phoenix and Denver. The transaction is expected to be completed in two separate closings, both of which should occur during the first quarter.