(Reuters) -Asset supervisor Blackstone (NYSE:) stated on Monday it might take non-public rental housing agency Condominium Revenue REIT, often known as AIR Communities, for $10 billion in money, together with debt, in what analysts see as a wager on easing stress throughout the industrial actual property market.
Beneath the deal, Blackstone can pay $39.12 for every share of the actual property funding belief, representing a premium of about 25% to its closing value on Friday. Shares of the REIT jumped about 23%.
Elevated rates of interest have put stress on landlords with loans on rental housing and different industrial actual property properties. Monday’s deal was seen by some analysts as a vote of confidence that this stress has begun easing.
“With this transaction, we imagine Blackstone is messaging they view rates of interest as stabilizing and entry to capital as improved, performing as a constructive read-through for the sub-sector,” Jefferies analysts wrote.
A high actual property investor, Blackstone has been sharpening its give attention to rental housing, betting on its revival as the provision of residences within the U.S. is predicted to say no as a result of a slowdown in building.
This was prone to elevate rental progress, which has over the previous few months remained flat or declined modestly as a result of recent provide in lots of U.S. markets.
AIR Communities, which has a comparatively diversified portfolio with residences in each Jap and Western coastal markets, has been largely insulated from such pressures.
“(It) represents the very best high quality, giant scale condominium portfolio we’ve got ever acquired, and is situated in markets the place multifamily fundamentals are robust,” stated Nadeem Meghji, world co-head of Blackstone Actual Property.
The rental housing supplier reported a 6.2% rise in same-store rental income within the fourth quarter, increased than the two%-4% progress by different publicly listed REITs equivalent to Mid-America Residences and Fairness Residential (NYSE:).
Blackstone plans to take a position one other $400 million to enhance the agency’s 76 rental housing communities. Its flagship Blackstone Actual Property Revenue Belief, which stabilized after some turbulence in late 2022, has outperformed non-listed friends by 600 foundation factors in 2023.
The corporate, whose actual property portfolio is valued at $586 billion, had in January agreed to take non-public Canadian single-family rental housing agency Tricon Residential.