Blackstone Said to Sell U.S. Apartments for $650 Million

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Demand for Apartments
Residential and commercial buildings stand in New York. Demand for apartments has increased as the U.S. homeownership rate falls and young Americans form households without being able to qualify for a mortgage. Photographer: Scott Eells/Bloomberg

Blackstone Group LP, the biggest private equity investor in real estate, sold more than 4,600 U.S. apartments to capitalize on strong demand for rental housing as it begins investing a new global property fund.

The price was more than $650 million, said a person with knowledge of the transaction who asked not to be identified because the details aren’t public. The buyers are closely held Strata Equity Group and investors from Mexico, the San Diego-based company said Tuesday in a statement, without disclosing terms. Peter Rose, a spokesman for New York-based Blackstone, declined to comment on the deal.

“The location and vintage of these assets is appealing from an investment and portfolio diversification standpoint,” Strata President David C. Michan said in the statement. Strata said it plans to renovate most of the 12 apartment complexes, which were built between 1989 and 2012 and are located in Atlanta, Denver, Houston and Austin, Texas.

Demand for apartments has increased as the U.S. homeownership rate falls and young Americans form households without being able to qualify for a mortgage. The number of renter-occupied housing units increased by almost 1.9 million from a year earlier in the first quarter, while owner-occupied housing decreased by 386,000, according to the Census Bureau.

The average U.S. apartment rent rose to a record $1,132 in the first quarter, according to real estate research firm Reis Inc. Rents in Atlanta, Austin, Denver and Houston also set records.

Most of the buildings Blackstone sold to Strata are from a 2013 acquisition of properties from a unit of General Electric Co. That year, Blackstone formed apartment company LivCor around the assets, and has continued to make rental-property acquisitions.

Apartment Purchase

In January, Blackstone agreed to buy 36 apartment properties across the U.S. for about $1.7 billion, two people with knowledge of that transaction said at the time. LivCor manages more than 30,000 units after the sale to Strata.

Blackstone has been selling assets from its 2012 fund, Blackstone Real Estate Partners VII, as it begins investing its new fund, BREP VIII. The first investment by the new fund was a joint deal last month with Wells Fargo & Co. to buy most of GE’s real estate holdings for about $23 billion, the largest real estate transaction since the financial crisis.

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