The world's largest private equity firm Blackstone has acquired the private rental housing company Apartment Income REIT for $10 billion (approximately 13.536 trillion KRW), according to the Wall Street Journal (WSJ) on the 8th (local time).
Blackstone is paying $39.12 per share, which is about a 25% premium over the closing price on the previous trading day, the 5th. On that day, Apartment Income's stock price surged about 22% to close the session.
The deal is expected to close by the end of the third quarter this year, and upon completion, Apartment Income will convert into a private REIT.
Apartment Income's housing portfolio consists of 76 luxury rental properties located in Miami, Los Angeles, Boston, Washington DC, and other cities. Blackstone plans to invest an additional $400 million (approximately 541.4 billion KRW) to strengthen the company's apartment portfolio.
Recently, the U.S. real estate market has been experiencing its worst period since the 2008 financial crisis. High interest rates and the increase in remote work after COVID-19 have especially hit the commercial real estate market hard. Blackstone appears to be focusing on the residential rental business as it anticipates a decline in housing supply in the U.S. due to a slowdown in construction activity.
WSJ explained that this acquisition reflects Blackstone's optimistic stance on the rental housing market and its belief that the overall real estate market has bottomed out, signaling a time to expand investments. Bloomberg reported that although real estate industry stock prices remain below their peak in early 2022, investor confidence in the sector seems to have strengthened.
Earlier, John Gray, Blackstone's Chief Operating Officer (COO), stated that "real estate values have hit bottom."
Wall Street also interpreted this deal as a sign that the U.S. real estate market is recovering. Crispin Love, an analyst at Piper Sandler, said, "This could be a signal that broader deal activity in the real estate industry is ready to pick up." Jefferies commented, "Through this deal, Blackstone is sending a message that interest rates have stabilized and capital accessibility has improved," adding, "This will be perceived as a positive message for the sector."
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