BREIT Among Blackstone Entities Making $964 Million Residential Sale to Equity Residential

Blackstone Real Estate Income Trust Inc. – a publicly registered non-traded real estate investment trust – along with other Blackstone (NYSE: BX) entities, have entered an agreement to sell a portfolio of 11 apartment properties to Equity Residential (NYSE: EQR) for approximately $964 million.

Global asset manager Blackstone and Equity Residential announced the acquisition agreement this morning, which involves separate transactions involving assets owned by BREIT, Blackstone Real Estate Partners and Blackstone Property Partners. The transactions, which remain subject to customary closing conditions, are expected to close in the third quarter of 2024.

“This transaction represents an excellent outcome for our investors and demonstrates the strong institutional demand for high quality assets,” said Asim Hamid, senior managing director at Blackstone Real Estate. “Rental housing remains one of our highest-conviction themes, and we continue to see strong fundamentals in attractive markets.”

The portfolio consists of four properties totaling 1,357 apartment units in Atlanta, four properties totaling 1,237 apartment units in Dallas/Ft. Worth, and three properties with a total of 978 apartment units in Denver. Each property is, on average, 8 years old.

“We are pleased to add these high-quality, well-located properties to our growing portfolios in Atlanta, Dallas/Ft. Worth, and Denver at pricing that is attractive compared to replacement costs,” said Alec Brackenridge, Equity Residential’s executive vice president and chief investment officer.

Equity Residential said that these properties are attractive to its higher-end renter demographic and accelerate its growth in these markets. Prior to this sale, Equity Residential owned or had investments in nearly 300 properties.

In April 2024, BREIT sold a student-housing portfolio consisting of 19 purpose-built properties to global investment firm KKR for $1.64 billion. BREIT acquired the portfolio for $1.2 billion in 2018 in a joint venture with Greystar Real Estate Partners LLC.

In August 2023, BREIT and Realty Income Corporation announced that Realty Income was to invest approximately $950 million to acquire common and preferred equity interests from BREIT in a joint venture to own a 95% interest in the real estate assets of The Bellagio in Las Vegas. The transaction valued the asset at $5.1 billion.

This latest news happened as BREIT reported on performance metrics for the first half of 2024. According to the REIT, it continued to outperform through the first half of the year, delivering a +2.4% Class I return year-to-date and a +10.2% annualized net return since inception, more than two times the return of both private real estate and publicly traded REITs.

Earlier this year, BREIT told stockholders that real estate values were bottoming and that it saw a recovery emerging that would further bolster BREIT’s outperformance. As a result, BREIT said it deployed capital across its high conviction sectors, including participating in the $17 billion Signature Bank senior commercial loan portfolio transaction, the $3.5 billion privatization of Tricon residential and QTS’s more than $22 billion data center development pipeline.

BREIT’s portfolio is approximately 85% concentrated in data centers, industrial and rental housing, sectors which are benefiting from megatrends. According to the company, data centers – likely powered by the explosive growth of AI – continued to drive BREIT’s performance in the second quarter and over the last 12 months. Since BREIT’s acquisition, QTS has tripled in size. It also noted that e-commerce has propelled its industrial portfolio (25%), driving demand for warehouses, particularly in locations near dense population centers where BREIT is concentrated.

Previously reported by AltsWire, BREIT had an aggregate net asset value of approximately $56.7 billion as of June 30, 2024, a decrease of roughly 1.1% from the previous month’s approximate $57.3 billion. Based upon preliminary estimated financial results, BREIT expected same property net operating income for the six months ended June 30 to have increased more than 4% from the same period in the prior year (based on the midpoint of the preliminary estimated range of same property NOI).

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