Private equity giants Blackstone and KKR on Monday kept up their buying sprees, growing their already vast real estate holdings before Christmas.
Blackstone agreed to buy Bluerock Residential Growth REIT, an apartment investment and development firm, in an all-cash deal valued at US$3.6bn. Under the deal, the private equity firm will get 30 US apartment properties and a loan portfolio secured by 24 multifamily assets. The majority of the properties are located in Atlanta, Phoenix, Orlando, Denver and Austin.
The sale came in the wake of a Bloomberg report in September that the REIT was looking at strategic options including a sale.
Not included in the deal are Bluerock's some 3,400 single-family properties which Bluerock intends to spin-off into a newly formed real estate investment fund, which will be called Bluerock Homes Trust. Morgan Stanley and Eastdil served as lead financial advisers to Bluerock along with Bank of America as an adviser, while Barclays and Wells Fargo Securities advised Blackstone.
Blackstone made a splash in the single-family rental sector in June with its US$6bn purchase of Home Partners of America.
KKR in the meantime said its real estate fund, KKR Real Estate Select Trust, bought 15 medical office buildings and ambulatory surgery centers in seven US states from Montecito Medical and FCA Partners for an undisclosed sum. The deal will re-capitalize the properties within Arkansas, Florida, Georgia, North Carolina, Tennessee, Texas and South Carolina with Montecito Medical retaining its interest in and operations for them.
“This acquisition represents a meaningful diversification of our KREST investment portfolio, and we are thrilled to expand the portfolio with new exposure to healthcare real estate,” KREST Chief Executive and Chief Operating Officer Billy Butcher said in a statement. The KKR fund recently made first-time investments in multifamily and international property acquisition.
Newmark advised Montecito Medical and KKR on the transaction and provided advice to KKR on debt financing. BMO provided financing for the transaction.
Private firms have tapped the securitization market frequently during 2021 to finance their real estate acquisitions especially in apartments and industrial properties. This has helped drive SASB issuance to US$81.6bn in 2021, which more than tripled the US$25.5bn total in the year before, according to Bank of America.
Blackstone and KKR declined to comment whether they would turn to the CMBS market to finance Monday's transactions.