Starwood Capital Group broke the 100,000-apartment mark last month with its purchase of Milestone Apartments REIT.
In acquiring the Dallas-based real estate investment trust, Starwood executed one of the few privatizations of a public REIT this year.
Milestone agreed to be acquired for $16.15 per share in mid-January in a deal valued at $2.6 billion, including debt. After shareholder pushback, Greenwich, Connecticut-based Starwood raised its price to $16.25 per share, which shareholders accepted. Excluding debt, the stock portion of the transaction increased from a value of $1.3 billion to $1.31 billion.
In the bigger picture of take-private transactions, it is unlikely many more such transactions will occur this year, said Dirk Aulabaugh, managing director of Newport Beach, California-based Green Street’s Advisory Group. “While in 2016 some may have thought the environment was ripe for take-privates, given how the public markets reacted to the election, it’s buoyed the stocks in a manner that makes a take-private less attractive to private equity,” he told PERE. “I’m not saying there will be none in 2017, but it appears that there are fewer opportunities than in the fall of 2016.”
Aulabaugh said take-private activity peaked in 2015, then slowed last year. However, he cautioned that with the headwinds facing malls, some retail REITs may become targets. Starwood itself looks positioned for more takeovers. Last month, the firm also inked a deal to acquire Forestar Group, a US homebuilder and developer listed on the New York Stock Exchange, for
$605 million.
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