Blackstone Buys Apartment Income REIT: Value Investors Rejoice

seekingalpha04-15

Multifamily REIT investment outlook was gloomy due to slowing rent growth and oversupply of housing units.Blackstone's pending acquisition of Apartment Income REIT (AIRC) sparked renewed interest in ...

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AIRC owns 76 apartment properties with geographic concentrations in DC, Boston, Philadelphia, Miami, and Los Angeles, among other metros. The properties’ vintages range from the 1890s to brand-spanking-new. In assuming the debt, Blackstone will commit about $10B to complete the acquisition. We reviewed AIRC for Seeking Alpha in March of last year and rated the shares a Strong Buy for the value metrics we described above. Additionally, we liked management’s efforts to recycle capital and improve overall portfolio quality and performance. With a focus on the minutest of details, the AIR Communities team aims to keep high quality tenants happy, grow NOI and minimize general and administrative expenses. Their earnings calls provide a proud quarterly semi","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"ISBC":"投资者银行","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","BK4215":"住宅房地产投资信托","BK4585":"ETF&股票定投概念","TCN.AU":"Techniche Ltd","BX":"黑石","BK7509":"中概股","BK4211":"区域性银行","REIT":"ALPS Active REIT ETF","AIRC":"Apartment Income REIT Corp","BK4205":"房地产经营公司","AIV":"公寓投管","BK4588":"碎股","AIV.AU":"ACTIVEX LIMITED","BK7095":"多种金属与采矿","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","IE00BLSP4452.SGD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis SGD-H Plus","TCN":"Tricon Residential Inc","BK4233":"房地产运营公司","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","CFA.SI":"NikkoAM-STC Asia REIT","BK4135":"资产管理与托管银行"},"translate_title":"黑石购买公寓收益房地产投资信托基金：价值投资者欢欣鼓舞","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AIV":1,"TCN.AU":1,"TCN":1,"REIT":1,"ISBC":1,"CFA.SI":1,"BX":1,"AIV.AU":1,"AIRC":1},"content_text":"Multifamily REIT investment outlook was gloomy due to slowing rent growth and oversupply of housing units.Blackstone's pending acquisition of Apartment Income REIT (AIRC) sparked renewed interest in apartment investments.Blackstone is taking AIRC private at a cash purchase price of $39.12/share, indicating their confidence in the value of the company.   ivanastar/E+ via Getty Images The early 2024 outlook for multifamily REIT investment could not have been gloomier. In its April report, Apartment List describes slowing rent growth as we enter the peak apartment leasing season.   Apartment List Source: Apartment List In part, this could be due to the outsized new deliveries and starts of housing units across a broad swath of markets.   RealPage Analytics Source: RealPage Analytics New supply is temporarily outpacing demand, which reduces occupancy and puts pressure on rents. The investment environment is not that bad, it just pales in comparison to the sky’s the limit optimism of two years ago. Then, before market on Monday April 8th, Blackstone (NYSE:BX) announced its pending acquisition of Apartment Income REIT (AIRC). The clouds parted and everyone wanted to invest in apartments again. The chart describes April 8 mid-morning multifamily REIT pricing action; no issue was left behind. Sector Spotlight: Multifamily REITs 04/08/2024   S&P Capital IQ Source: S&P Capital IQ The Deal Prior to the announcement, Apartment Income REIT was trading at the lower end of the multifamily sector’s forecast price/FFO multiple of about 15x. Additionally, the pre-announcement share price of $31.35 represented a discount of more than 25% to median consensus NAV of $42.29. These metrics, along with other factors appealed to 2nd Market Capital’s value investor orientation, so we were long the shares.   S&P Capital IQ Source: S&P Capital IQ Blackstone is taking AIRC private through an all-cash purchase at $39.12/share. This price translates the same metrics to 16.2x consensus estimate of $2.41/share and 92% of consensus/share NAV. What did BX get and what do they see that the markets did not? Apartment Income REIT  AIRC is a multifamily REIT that was spun out of Apartment Investment Management (AIV) a couple of years ago. AIRC owns 76 apartment properties with geographic concentrations in DC, Boston, Philadelphia, Miami, and Los Angeles, among other metros. The properties’ vintages range from the 1890s to brand-spanking-new. In assuming the debt, Blackstone will commit about $10B to complete the acquisition. We reviewed AIRC for Seeking Alpha in March of last year and rated the shares a Strong Buy for the value metrics we described above. Additionally, we liked management’s efforts to recycle capital and improve overall portfolio quality and performance. With a focus on the minutest of details, the AIR Communities team aims to keep high quality tenants happy, grow NOI and minimize general and administrative expenses. Their earnings calls provide a proud quarterly seminar on real estate management excellence, insight, and efficiency. Going forward, the calls will be missed. BX is one of the world’s largest asset management companies and maintains a strong focus on real estate investment. In gathering several hundred billion dollars over the last several years, Blackstone recognizes its role only starts with raising capital and that the real work begins with investing it. While investors, individual and institutional alike, have wasted a lot of time on the sidelines contemplating supply and demand, inflation and the direction of interest rates, BX acted in securing a multibillion-dollar portfolio at a discount to NAV. In recent quarters BX has expressed more enthusiasm for investment in industrial and data center assets but seems to always return to residential real estate. In January, Blackstone inspired our seller’s remorse in the take private transaction of Tricon Residential (TCN). Not present in the multifamily sector for a couple of years, Blackstone’s AIRC acquisition can possibly achieve additional economies through coupling operations with its other multifamily holdings including BlueRock Residential Growth (BRG acquired 2021) and Preferred Apartment Communities (APTS acquired 2022). As always, BX has structured a fully considered deal that likely will improve the realizable value of Apartment Income REIT. The Deal Going Forward With it being an all-cash transaction, we considered holding our position to receive the full $39.12/share. The too hot April 10 CPI report, however, knocked the wind out of anything real estate related, and Monday’s multifamily REIT price gains quickly deflated. On Wednesday, we sold our AIRC shares and look to redeploy capital into discounted multifamily opportunities.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2427725050"}