Blackstone Real Estate Income Trust (BREIT) continues its multifamily expansion into strong Sun Belt markets with the announcement that it will acquire Preferred Apartment Communities (PAC). BREIT will acquire all outstanding shares of PAC’s common stock for $25 per share in an all-cash transaction valued at approximately $5.8 billion.
“This transaction is an excellent outcome for our stockholders and the culmination of the hard work our first-class team has done over the past few years to simplify and refocus our portfolio,” said PAC chairman and CEO Joel T. Murphy.
PAC’s portfolio includes 44 multifamily communities with approximately 12,000 units concentrated in Atlanta; Charlotte, North Carolina; Jacksonville, Orlando, and Tampa, Florida; and Nashville, Tennessee. In addition, BREIT will acquire PAC’s two Sun Belt office properties; 54 grocery-anchored retail assets primarily located in Atlanta, Nashville, Orlando, and Raleigh, North Carolina; and 10 mezzanine/preferred equity investments collateralized by multifamily assets under construction or newly built.
“We are pleased to acquire Preferred Apartment Communities and its portfolio of high-quality assets in key Sun Belt markets, which represents a significant majority of the company’s value. Investing using BREIT’s perpetual capital will enable us to be long-term owners of these vibrant communities,” said Jacob Werner, co-head of Americas acquisitions for Blackstone Real Estate. “The company’s grocery-anchored retail portfolio performance has also been strong and resilient, and we believe these types of necessity-oriented assets in areas with growing populations are well-positioned for continued growth.”
Werner added that PAC has a terrific property management and operations team that shares Blackstone’s commitment to being best-in-class owners.
“They have deep relationships and real estate expertise within the Sun Belt region, and we look forward to working closely with them to grow the business and continue to deliver a great experience for residents and tenants.”
Blackstone has been on an acquisition spree in the Sun Belt. In January, it announced that it was acquiring Resource REIT, a publicly registered non-traded REIT, in an all-cash $3.7 billion transaction. Resource REIT’s portfolio included 42 garden-style multifamily communities with more than 12,600 units in some of the fastest-growing Sun Belt submarkets spanning 13 states, including Arizona, Colorado, Florida, Georgia, and Texas. This followed the December announcement that it had agreed to acquire Bluerock Residential Growth REIT in a deal valued at $3.6 billion. The transaction included 30 multifamily communities with about 11,000 units—primarily garden-style apartments also located in the strong Sun Belt markets of Atlanta; Austin, Texas; Denver; Orlando, Florida; and Phoenix—and a loan book secured by 24 rental assets.
The transaction has been unanimously approved by PAC’s board of directors and is expected to close in the second quarter, subject to customary closing conditions.
Jones Lang LaSalle Limited, BofA Securities, Lazard Frères & Co., and Wells Fargo Securities are serving as BREIT’s financial advisors, and Simpson Thacher & Bartlett is acting as legal counsel. Goldman Sachs & Co. is serving as PAC’s lead financial advisor. KeyBanc Capital Markets also is serving as financial advisor to PAC, and King & Spalding and Vinson & Elkins are serving as legal counsel.
