The nation’s largest apartment operator, Greystar Real Estate Partners, has agreed to sell a 32-property, 10,399-unit multifamily portfolio to New York City–based investment firm Blackstone Group for $2 billion in a deal that closed Tuesday, Multifamily Executive has exclusively learned.
Greystar Equity Partners VII, or GEP VII, a $600 million commingled fund that held its final close in 2011, was the entity that made the sale to Blackstone Real Estate Partners VIII, controlled by Blackstone. “We acquired the assets,” Bob Faith, chairman and CEO of Greystar says, “we rejiggered the operations to run them better; we invested the capital to upgrade them; so we felt like we have done the heavy lifting of our value-creation process. So this was a great opportunity to achieve our return targets for our investors. Investors love it when you send them money back.”
The portfolio consists of a mix of mid-rise, high-rise, and garden-style apartment buildings, with properties located across the country, including the Seattle, San Francisco, Los Angeles, South Florida, New York, and Boston metros.
Faith says the 32 properties were lumped into one portfolio in this case because it made the most sense, adding that the portfolio attracted the attention of investors all over the world and garnered more than half a dozen offers. Faith notes that nearly all the interested parties were private companies.
“We just look at the landscape and try to figure out the best thing to do by our investors when it comes time to exit,” Faith says. “There's a lot of demand in the marketplace today for such a well-located, nationally diversified footprint of apartments in all the hot markets around the country. We just felt like taking it all out as a portfolio was probably the best way.”
Greystar, which is based in Charleston, S.C., and manages more than 400,000 units globally, hired Holliday Fenoglio Fowler over the summer to broker the deal. Faith says negotiations with Blackstone were concluded roughly 45 days ago.
Despite selling the real estate, Greystar will continue to serve as property manager at each location. Faith says that wasn't something Greystar stipulated in the negotiation. “We happen to think Blackstone is pretty darn smart, so they picked the best property manager in the country to do it,” he says jokingly, adding that the two companies have similar partnerships at properties nationwide. “I think Blackstone was very comfortable leaving us in place as the property manager.”
Faith is happy with the sale but says it won't impact the $800 million successor fund to GEP VII, GEP VIII, which made its final close in 2014. According to Faith, GEP VIII is still in the “value-creation stage” where investments are being made to upgrade and enhance the facilities.
This isn’t the
first time Blackstone has pulled the trigger on a big money deal. In 2013, the firm purchased a multifamily portfolio valued at $2.7 billion from
General Electric that included 80 apartment complexes and 30,000 units.