Blackstone Real Estate Investment Trust has entered into a definitive agreement to purchase Preferred Apartment Communities, or PAC, for $5.8 billion. The transaction, expected to close in the second quarter, has been unanimously approved by PAC’s board of directors.
Once complete, Blackstone’s multifamily portfolio will increase by 12,000 units across 44 assets. Most of these assets are located within the Sunbelt region, but the seller’s communities in Pennsylvania, Kansas, and Kentucky are also part of the deal.
The deal includes more than multifamily. PAC’s retail assets — totaling 6 million square feet in 54 grocery-anchored retail centers — are also part of the transaction, as are two office properties and 10 mezzanine and preferred equity investments.
Under the terms of the deal, Blackstone will purchase all of PAC’s outstanding shares of common stock for $25 per share, and all holders of PAC’s preferred stock will get $1,000 per share in addition to unpaid dividends. Terms also include a “go-shop” period of 30 days, when PAC is permitted to source alternate proposals. This period expires March 18.
Goldman Sachs and KeyBanc Capital Markets are PAC’s financial advisors in the deal, with JLL, BofA Securities, and Wells Fargo advising Blackstone.
Blackstone has made a number of serious plays in just the past two months: In late January, the firm agreed to the $3.7 billion acquisition of Resource REIT’s 12,600 units. And that came on the heels of another, $3.6 billion deal involving BlueRock Residential and its portfolio of approximately 11,000 units. Both of these transactions are also expected to close in the second quarter of 2022.
The Sunbelt has, during the past several years, been increasingly viewed as a strong region for multifamily investors to deploy capital. Corporate relocations, tax incentives, and swift population growth underscore the investment upside in the region.
This past December, CREXI highlighted the best cities for multifamily investment in 2022. Seven of the 10 metros listed are in the Sunbelt, which are all expected to register significant rent growth this year.