Starwood buys 23K rentals from Sam Zell for $5.4B

Units are mostly located in low- and mid-rise suburban buildings

New York /
Oct.October 26, 2015 09:48 AM

Barry Sternlicht’s Starwood Capital paid Sam Zell’s Equity Residential $5.4 billion for a massive portfolio of suburban rental units in cities throughout the country, the second multi-billion-dollar deal in the last week.

The 23,300-unit portfolio, about a quarter of Equity’s holdings, mostly consists of apartments in low- and mid-rise buildings in suburban markets around Denver, Seattle, Washington, D.C., and in South Florida and Southern California.

Starwood is paying approximately $230,600 per unit, which represents a capitalization rate of 5.5 percent, about on par with recent deals, the Wall Street Journal Reported.

Zell, famous for selling his Equity Office Properties in 2007, at the top of the real estate market, is shifting his emphasis from suburbs, where new construction abounds, to urban cores where new building is more difficult.

His company has become “less aggressive as buyers of assets,” he told the Wall Street Journal. “There’s an awful lot of apartments under construction,” Zell said, “and the majority of them are garden apartments in suburban areas.”

Sternlicht, for his part, is ready to move in. His company has bought or put under contract 67,800 apartments over the past year.

“This is the healthiest U.S. apartment market in my lifetime,” Mr. Sternlicht said in an interview Friday. “We don’t see that trend reversing.”

Average apartment rents in the U.S. have climbed 20 percent over the past five years, according to research firm REIS Inc.

The price of the deal just barely exceeds the other earth-shaking buy of the month, the Blackstone Group’s acquisition of 11,000-unit Stuyvesant Town along with partners Ivanhoe Cambridge, for $5.3 billion. [WSJ] – Ariel Stulberg


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)
Hudson Yards megadevelopment inspires a new line of sex toys
Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)
Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
A&E Real Estate CEO James Patchett (Courtesy of A&E Real Estate)
Former EDC head James Patchett named CEO of A&E Real Estate
Former EDC head James Patchett named CEO of A&E Real Estate
TIG founding principal Elliott Ingerman and the Textile Building at 295 Fifth Avenue (LinkedIn, Google Maps)
Fifth Avenue’s Textile Building to get $350M makeover
Fifth Avenue’s Textile Building to get $350M makeover
Fifth Wall’s Brendan Wallace (right) and Andriy Mykhaylovskyy (Facebook/Fifth Wall; iStock)
Fifth Wall launches third SPAC to raise $250M
Fifth Wall launches third SPAC to raise $250M
Extell's Gary Barnett and One57 (Getty)
One57 is 90% sold: Extell announces Q1 sales
One57 is 90% sold: Extell announces Q1 sales
The Real Deal's E.B. Solomont
CoStar hits it Home, office-startups make bank
CoStar hits it Home, office-startups make bank
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...