Starwood Capital Group and Milestone Apartments Real East Investment Trust have agreed to acquire Landmark Apartment Trust and its nearly 24,000 units for approximately $1.9 billion, the companies announced last week. The transaction is expected to close early next year.
Florida-based Landmark owns and manages properties in the southern U.S. as far west as Texas and north as Virginia. Monument Partners, which is owned Starwood and Milestone, will acquire the properties, in addition to Landmark’s existing debt and all of the outstanding common stock and common units for $8.17 per share.
“Given that many stockholders have held shares for many years, our Board believes that liquidity is a primary driver for our stockholder constituency,” said Ed Kobel, chairman of the Landmark Board of Directors. “This is an all-cash transaction giving stockholders immediate liquidity at closing.”
Landmark’s Board of Directors approved the merger and has recommended the company’s stockholders to do the same. The transaction is contingent on the approval by stockholders holding a majority of Landmark’s outstanding common stock and outstanding preferred stock, voting together as a single class, and is subject to the satisfaction or waiver of certain other closing conditions.
“[The] announcement marks the successful conclusion of a strategic review process that our Board of Directors undertook earlier this year, which included the potential for an initial public offering,” said Jay Olander, CEO of Landmark. “Given recent market volatility, we believe that this merger provides our stockholders with a more certain liquidity event. Management and the Board of Directors support the transaction and will work diligently to ensure a smooth transition.”
Starwood, a Connecticut-based private investment firm, will acquire the ownership interest in 19,615 units in 63 apartment communities while Milestone will attain 4,172 units in 15 assets as part of the transaction.
“This acquisition highlights our confidence in multifamily housing as an asset class that represents an attractive risk/reward proposition for our investors,” said Christopher Graham, senior managing director and head of real estate acquisitions for the Americas at Starwood. “Across the United States, demographic, economic and financial factors are driving apartment vacancy rates lower and rental rates higher—and we believe that these trends will continue into the foreseeable future.”
Ethan Bing, vice president at Starwood, said the population in the markets within the portfolio has expanded by 1.5% annually over the last two years, which makes the portfolio appealing. “We look forward to working with Milestone and are thrilled to capitalize on a rare opportunity to acquire a large portfolio of apartment communities at a discount to replacement cost that provides both immediate cash yield and growth potential,” he said. “These assets are located in markets that benefit from a wide variety of demand drivers for population, job and household formation growth.”