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The Blackstone effect: Apartment stocks surge

Financial giant agrees to acquire AIR Communities for $10B

Blackstone's Jonathan Gray (Getty, X fka Twitter)
Blackstone's Jonathan Gray (Getty, X fka Twitter)

Blackstone’s agreement to acquire AIR Communities is the rising tide lifting multifamily stocks.

The Bloomberg Apartment REIT Index recorded its largest single-day gain since December on Monday, Bloomberg reported. The index, which tracks 13 apartment landlords, jumped 4 percent on the day.

While shares remain below the 2022 highs, Monday’s surge wiped out all of the year’s losses. After ending last week down more than 3 percent year-to-date, the index was up 0.9 percent for the year by the end of Monday, outshining other real estate investment trusts.

The biggest riser was Apartment Income REIT, also known as AIR Communities. The company’s stock rose 22 percent on Monday after Blackstone’s $10 billion agreement to acquire the company was disclosed. The stock topped out at $38.38 per share, not far below Blackstone’s $39.12 per share purchase price.

Wall Street analysts are of mixed opinions regarding AIR, which counted four buy ratings and seven holds, according to Bloomberg’s roundup of analyst forecasts. BMO Capital Markets downgraded the stock because it doesn’t expect a competing bid, which would push the share price.

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But as the world’s largest commercial real estate owner, Blackstone’s impact stretches well beyond AIR and to the rest of the sector. BTIG analyst Michael Gorman said the firm’s acquisition “is likely to spur additional bullish sentiment for the group beyond the current supply wave impacting fundamentals.”

Blackstone’s acquisition of AIR, which is expected to close next quarter, represents the company’s largest acquisition in the multifamily sector. Blackstone will take the company private.

Blackstone’s acquisition will also lead to a $400 million investment to improve AIR’s existing properties. AIR, led by Terry Considine, split off from AIMCO in 2020.

Among other recent moves, Blackstone acquired a stake in Signature Bank’s $17 billion loan portfolio and teamed with Digital Realty on a joint venture to develop $7 billion in data centers. This year, Blackstone agreed to acquire single-family rental operator Tricon Residential for $3.5 billion. 

— Holden Walter-Warner

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