Blackstone Real Estate to Take AIR Communities Private for Approximately $10 Billion
- None.
- None.
Insights
The acquisition of Apartment Income REIT Corp. by Blackstone represents a significant consolidation in the real estate investment sector, particularly within the high-quality rental housing market. The transaction's valuation at approximately $10 billion, inclusive of debt assumption, signifies a strategic move by Blackstone to capitalize on the strong multifamily fundamentals in coastal markets. The premium of 25% over the closing share price and volume weighted average indicates a bullish stance on the future performance of these assets.
From an investment perspective, the suspension of quarterly dividends by AIR as a condition of the transaction may raise concerns among current shareholders regarding short-term income. However, this move could be viewed as a strategic reallocation of funds towards the enhancement of the property portfolio, potentially yielding higher returns in the long-term through increased property values and rental income. The commitment to invest over $400 million in the existing portfolio aligns with a long-term growth strategy that could benefit both companies and their stakeholders.
The unanimous approval by AIR Communities' Board of Directors suggests a strong belief in the mutual benefits of the deal. The legal intricacies of such a large-scale acquisition, with multiple financial advisors and legal counsels involved, are complex. The role of firms like Simpson Thacher & Bartlett LLP and Skadden, Arps, Slate, Meagher & Flom LLP will be pivotal in navigating regulatory approvals, due diligence and ensuring compliance with securities laws.
For the transaction to proceed smoothly, it must satisfy customary closing conditions and obtain approval from AIR Communities’ stockholders. The de-listing of AIR Communities' common stock from the NYSE post-transaction is a standard procedure in going-private acquisitions, which will transition the company from a publicly-traded to a privately-held entity, thereby altering its reporting requirements and shareholder composition.
The deal highlights Blackstone's strategy to focus on high-demand coastal markets, such as Miami, Los Angeles, Boston and Washington D.C., where rental housing is expected to remain robust due to urbanization and limited housing supply. The acquisition may impact the competitive landscape, potentially leading to market consolidation and affecting rental pricing dynamics.
Investors and market observers should monitor the integration process post-acquisition, as it will be critical for Blackstone to leverage AIR Communities' operational strengths to maximize investment returns. The emphasis on maintaining and improving the resident experience is indicative of a customer-centric approach that could differentiate the portfolio in a competitive market.
Plans to Invest More Than
The purchase price represents a premium of
AIR Communities’ portfolio consists of 76 high-quality rental housing communities concentrated primarily in coastal markets including
“I am proud of the AIR team and its remarkable culture. The transaction will strengthen the AIR mission to provide homes for others, be a great place to work, act as responsible stewards of AIR communities, and be a trusted partner to AIR investors. The business the AIR team has built will be improved and expanded by collaboration with
“AIR Communities represents the highest quality, large scale apartment portfolio we have ever acquired, and is located in markets where multifamily fundamentals are strong. We are very impressed by the terrific operating team at AIR Communities and look forward to working closely with them, while continuing to deliver a fantastic resident experience,” said Nadeem Meghji, Global Co-Head of Blackstone Real Estate.
Transaction Terms, Timing and Approvals
The transaction was unanimously approved by the AIR Communities Board of Directors and is expected to close in the third quarter of 2024, subject to approval by AIR Communities’ stockholders and other customary closing conditions. As a condition to the transaction, AIR has suspended payment of its quarterly dividend, effective immediately.
Subject to and upon completion of the transaction, AIR Communities’ common stock will no longer be listed on the New York Stock Exchange.
Advisors
BofA Securities, Barclays, Goldman Sachs & Co. LLC and Wells Fargo are acting as Blackstone’s financial advisors, and Simpson Thacher & Bartlett LLP is serving as Blackstone’s legal counsel.
Citigroup Global Markets Inc. is acting as AIR Communities’ financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as AIR Communities’ legal counsel.
About Apartment Income REIT Corp. (AIR Communities)
Apartment Income REIT Corp (NYSE: AIRC) is a publicly traded, self-administered real estate investment trust (“REIT”). AIR’s portfolio comprises 76 communities totaling 27,010 apartment homes located in 10 states and the
About Blackstone Real Estate
Cautionary Statement Regarding Forward-Looking Statements
This communication includes certain disclosures which contain “forward-looking statements” within the meaning of the federal securities laws, including but not limited to those statements related to the transaction, including financial estimates and statements as to the expected timing, completion and effects of the transaction. You can identify forward-looking statements because they contain words such as “expect,” “believe,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “forecast,” “outlook” and variations of these terms or the negative of these terms and similar expressions. Forward-looking statements, including statements regarding the transaction, are based on the Company’s current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance.
Important factors, risks and uncertainties that could cause actual results to differ materially from such plans, estimates or expectations include but are not limited to: (i) the parties’ ability to complete the transaction on the anticipated terms and timing, or at all, including the Company’s ability to obtain the required stockholder approval, and the parties’ ability to satisfy the other conditions to the completion of the transaction; (ii) potential litigation relating to the transaction that could be instituted against the Company or its directors, managers or officers, including the effects of any outcomes related thereto; (iii) the risk that disruptions from the transaction will harm the Company’s business, including current plans and operations, including during the pendency of the transaction; (iv) the ability of the Company to retain and hire key personnel; (v) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; (vi) legislative, regulatory and economic developments; (vii) potential business uncertainty, including changes to existing business relationships, during the pendency of the transaction that could affect the Company’s financial performance; (viii) certain restrictions during the pendency of the transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; (ix) unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, outbreaks of war or hostilities or the COVID-19 pandemic, as well as management’s response to any of the aforementioned factors; (x) the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (xi) the occurrence of any event, change or other circumstance that could give rise to the termination of the transaction, including in circumstances requiring the Company to pay a termination fee; (xii) those risks and uncertainties set forth under the headings “Special Note Regarding Forward Looking Statements” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K, as such risk factors may be amended, supplemented or superseded from time to time by other reports filed by the Company with the Securities and Exchange Commission (the “SEC”) from time to time, which are available via the SEC’s website at www.sec.gov; and (xiii) those risks that will be described in the proxy statement that will be filed with the SEC and available from the sources indicated below.
These risks, as well as other risks associated with the transaction, will be more fully discussed in the proxy statement that will be filed by the Company with the SEC in connection with the transaction. There can be no assurance that the transaction will be completed, or if it is completed, that it will close within the anticipated time period. These factors should not be construed as exhaustive and should be read in conjunction with the other forward-looking statements. The forward-looking statements relate only to events as of the date on which the statements are made. The Company and
Important Additional Information and Where to Find It
This communication is being made in connection with the transaction. In connection with the transaction, the Company will file a proxy statement on Schedule 14A and certain other documents regarding the transaction with the SEC. Promptly after filing its definitive proxy statement with the SEC, the definitive proxy statement will be mailed to stockholders of the Company. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, COMPANY STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT THAT WILL BE FILED BY THE COMPANY WITH THE SEC (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. Company stockholders will be able to obtain, free of charge, copies of such documents filed by the Company when filed with the SEC in connection with the transaction at the SEC’s website (http://www.sec.gov). In addition, the Company’s stockholders will be able to obtain, free of charge, copies of such documents filed by the Company at the Company’s website (www.aircommunities.com). Alternatively, these documents, when available, can be obtained free of charge from the Company upon written request to the Company at 4582 South Ulster Street, Suite 1700,
Participants in the Solicitation
The Company and certain of its directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies from stockholders of the Company in connection with the transaction. Additional information regarding the identity of the participants, and their respective direct and indirect interests in the transaction, by security holdings or otherwise, will be set forth in the proxy statement and other relevant materials to be filed with the SEC in connection with the transaction (if and when they become available). You may obtain free copies of these documents using the sources indicated above.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240408368769/en/
AIR Communities:
Matthew O’Grady, Executive Vice President, Capital Markets
(303) 691-4566
matthew.ogrady@aircommunities.com
Jillian Kary
Jillian.Kary@Blackstone.com
Source:
FAQ
What is the ticker symbol for Blackstone?
What is the acquisition price for AIR Communities?
Where are AIR Communities' rental housing communities located?
When is the transaction expected to close?
Who is serving as Blackstone's financial advisors?
