AvalonBay Communities is doubling down on the Lone Star State. The multifamily REIT is under contract with BSR Real Estate Investment Trust and its subsidiaries to acquire two apartment communities in Austin and six in the Dallas-Fort Worth metroplex.
The acquisition of the Austin communities, which comprise 857 units, is expected to close on or around March 31 for an aggregate purchase price of $187 million in cash, funded with disposition proceeds.
The Dallas-Fort Worth portfolio, which includes 1,844 units, is expected to close in the second quarter for an aggregate purchase price of $431.5 million. AvalonBay will make a cash payment of approximately $193 million, a portion of which will be used by BSR Trust for the repayment of existing indebtedness relating to the portfolio, with the remainder used for the repayment of other indebtedness; transaction expenses and general corporate purposes; and the issuance to participating holders of BSR Class B Units of approximately $238.5 million of DownREIT Units, valued at $225 per unit, in a newly formed subsidiary partnership of the company.
Both acquisitions are subject to customary closing conditions, and the Dallas-Fort Worth acquisition also will be subject to the participation of additional holders of BSR Class B Units.
“This transaction will double the size of our portfolio in our Texas expansion regions at a time when assets can be acquired at a compelling basis relative to today’s construction costs, with assts that are strongly aligned with our portfolio allocation priorities,” said AvalonBay chief investment officer Matthew Birenbaum.
He added: “The assets are suburban garden communities with an average age of 11 years, providing a strong complement to our current and planned development activity with rents at a more affordable price point, and allowing for increased operating synergies as we increase our scale in these high-growth regions.”
The Austin acquisitions include the 554-unit Cielo, built in 2015 as two properties, and the 303-unit Retreat at Wolf Ranch, built in 2017. The Dallas-Fort Worth portfolio includes developments built between 1995 and 2021: the 216-unit Auberry at Twin Creeks, the 301-unit Aura Benbrook, the 276-unit Lakeway Castle Hills, the 330-unit Satori Frisco, the 349-unit Vale Frisco, and the 372-unit Wimberly.
Wachtell, Lipton, Rosen & Katz; Davies Ward Phillips & Vineberg; and Goulston & Storrs are acting as legal counsel for AvalonBay in connection with the transactions.
