Equity Residential Buys Apartment Portfolio for Nearly $1 Billion
Purchase of apartments is the largest by a public REIT in seven years
Apartment giant Equity Residential said it has agreed to purchase 11 apartment complexes with more than 3,500 units for $964 million, the latest big investor bet that rents and values are poised for a rebound.
Its acquisition of the garden apartments and other types of rental units in the Atlanta, Denver and Dallas/Fort Worth regions marks the biggest U.S. multifamily purchase by any public real estate investment trust in the past seven years.
The seller is the investment firm Blackstone, which otherwise has been a big buyer of apartments this year. In June, Blackstone completed its purchase of Apartment Income REIT, an owner of upscale apartment buildings, for about $10 billion. It is selling these properties to Equity Residential in part to return cash to investors.
“Rental housing remains one of our highest-conviction themes, and we continue to see strong fundamentals in attractive markets,” said Asim Hamid, senior managing director at Blackstone Real Estate.
Equity Residential is one of the largest owners of U.S. apartments with about 80,000 units in close to 300 properties.
The firm was attracted to the portfolio because the complexes are in high growth markets, said Alec Brackenridge, the company’s chief investment officer. He said the price of the units, which on average are eight years old, was attractive compared with what it would cost to replace them.
Like with most other commercial real estate, rental apartment values have been hurt by high interest rates. Many apartment owners also have been unable to raise rents during the biggest construction boom for the multifamily sector in about 40 years.
But there have been a flurry of big deals in the multifamily sector this year, indicating that more investors are anticipating a rebound. This view has been strengthened by the growing likelihood that the Federal Reserve will cut interest rates in September.
Investors are also becoming more bullish on the multifamily sector because the glut of new supply is being absorbed in some markets as development cools. In some cities in the Northeast and Midwest, rents are rising again.
“In the longer term we see relief on the way that [construction] starts in these oversupplied markets have collapsed and deliveries in 2026 and 2027 are likely to be much lower than both current levels and historical levels,” said Mark Parrell, Equity Residential’s chief executive, in an earnings call last month.
Other deals this year include KKR’s purchase in June of more than 5,200 units for $2.1 billion from Quarterra, the apartment development arm of home builder Lennar. Brookfield recently bought a portfolio of 7,000 apartments for $1.55 billion.
The properties that Blackstone is selling to Equity Residential in separate transactions are being held by three of the firm’s funds: Blackstone Real Estate Income Trust, Blackstone Real Estate Partners and Blackstone Property Partners. Closings are expected to take place in the third quarter.