New York-based alternative investment management company Blackstone, Inc.’s (NYSE: BX) Blackstone Real Estate Income Trust (BREIT) has signed an agreement to acquire all outstanding common shares of real estate investment trust Preferred Apartment Communities, Inc. (NYSE: APTS) for $25 per share.
The all-cash transaction values APTS at around $5.8 billion. The price represents an approximately 39% premium over APTS stock’s closing price on February 9.
Headquartered in Georgia, Preferred Apartment is engaged in the acquisition and operation of multifamily properties in select targeted markets across the U.S. Its portfolio includes 44 multifamily communities, comprising nearly 12,000 units, in Atlanta, Orlando, Tampa, Jacksonville, Charlotte and Nashville.
APTS also owns 54 grocery-anchored retail assets, totaling almost six million square feet, in Atlanta, Orlando, Nashville and Raleigh.
As per the terms of the deal, BREIT will also acquire Preferred Apartment’s 10 mezzanine/preferred equity investments and two Sun Belt office properties.
Commenting on the acquisition, Jacob Werner, Co-Head of Americas Acquisitions for Blackstone Real Estate, said, “We are pleased to acquire Preferred Apartment Communities and its portfolio of high-quality multifamily assets in key Sun Belt markets, which represents a significant majority of its value.”
“Investing using BREIT’s perpetual capital will enable us to be long-term owners of these vibrant communities. The company’s (Preferred Apartment) grocery-anchored retail portfolio performance has also been strong and resilient, and we believe these types of necessity-oriented assets located in areas with growing populations are well-positioned for continued growth,” Werner added.
The acquisition is expected to complete in the second quarter of this year.
Following the announcement on Wednesday, Preferred Apartment’s shares gained 10.8% to close at $25.80 and BX stock closed 1.5% up at $126.78.
Wall Street’s Take
Last week, Colliers Securities analyst Barry Oxford reiterated a Buy rating on APTS with a price target of $24 (7% downside potential).
Overall, the stock has a Moderate Buy consensus rating based on 1 Buy and 3 Holds. The average Preferred Apartment Communities price target of $19.33 implies 25.1% downside potential. Shares have gained 248.7% over the past year.
TipRanks data shows that financial blogger opinions are 80% Bullish on APTS, compared to the sector average of 73%.
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