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Starwood Capital, Milestone to Buy Apartment Owner Landmark

Updated on
  • Transaction is valued at $1.9 billion, including debt
  • Landmark will remain a closely held company, scraps IPO

Starwood Capital Group and Milestone Apartments Real Estate Investment Trust agreed to buy Landmark Apartment Trust Inc., an owner of multifamily properties in the southern U.S., in a deal valued at $1.9 billion, including debt.

A Starwood and Milestone-owned entity called Monument Partners will acquire the landlord for $8.17 a share, Landmark said in a statement Thursday. The deal includes 78 apartment communities in eight states, with concentrations in cities such as Dallas, Atlanta and Nashville, Tennessee.

The transaction marks a change of course for Richmond, Virginia-based Landmark, which filed for an initial public offering in May. The decision to scrap the IPO follows a rout in global markets amid concerns about slowing growth in China and the potential for an interest-rate increase in the U.S. For many REITs, properties are valued higher in the private market than publicly.

“Given recent market volatility, we believe that this merger provides our stockholders with a more certain liquidity event,” Jay Olander, Landmark’s chief executive officer, said in the statement.

Starwood Apartments

A Starwood affiliate will acquire 63 of Landmark’s communities under the deal, the Greenwich, Connecticut-based company said in a separate statement. Dallas-based Milestone will get the remaining 15 assets and will be the property manager for Starwood’s portion of the portfolio.

The deal would increase Starwood’s U.S. apartment holdings to almost 65,000 units, according to the statement. The company, controlled by billionaire Barry Sternlicht, has acquired or entered into contracts to buy 44,500 multifamily units in the past 12 months.

Apartments have led a five-year recovery in U.S. commercial real estate values as more people turn to renting rather than buying a home. Prices for multifamily buildings are 33 percent higher than they were at the prior peak in 2007, according to Moody’s Investors Service and Real Capital Analytics Inc.

(Updates with transaction details starting in second paragraph.)
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