Eight years after Blackstone Group LP swallowed the biggest U.S. owners of both offices and hotels, the private equity firm’s acquisition of Manhattan’s largest apartment complex catapults the company to the top ranks of New York residential landlords.
The $5.3 billion purchase of Stuyvesant Town-Peter Cooper Village will give Blackstone control of more than 11,000 apartments in Manhattan and mark a big push by the company into New York housing, a new area for the world’s biggest private equity real estate investor. The red-brick enclave, located between 14th and 23rd streets, is one of the last affordable havens in the city, where rents are triple the national average.
The acquisition shows how Blackstone has grown into a real estate deal machine since the company went public in 2007. This year, it completed the biggest property transaction since the financial crisis, leading the $23 billion purchase of assets from General Electric Co. The foray into apartments -- which other private equity firms have invested in for far longer -- began about two years ago, and the Stuyvesant Town deal will bring Blackstone’s multifamily holdings to more than 46,000 units, on top of the more than 45,000 single-family rental homes it has bought since the beginning of 2012.
“They’ve gone from nearly zero to 100,000 units in less than five years,” said Dave Bragg, a housing analyst at real estate research firm Green Street Advisors in Newport Beach, California. “That’s staggering.”
Large Landlords
Stuyvesant Town, home to about 30,000 people, is Blackstone’s second major residential purchase in Manhattan, following a September investment in 24 buildings. The latest deal, in a roughly 50-50 partnership with Canadian pension investor Ivanhoe Cambridge Inc., means the firm will join the ranks of large New York landlords such as Related Cos. and Equity Residential.
New York-based Related has more than 9,100 units, according to Real Capital Analytics Inc. Equity Residential, the biggest multifamily real estate investment trust, owns about 10,300 rentals in the city.
Blackstone intends to own the complex “for a long time,” Jon Gray, the firm’s head of real estate, said at a press conference for the deal Tuesday.
The $5.3 billion Stuyvesant Town purchase price equates to a capitalization rate-- a measure of investment yield used in real estate -- of about 4 percent, based on estimated 2015 net operating income for the property, Bragg said. Blackstone is likely to boost its return further through expense controls, he said.
Core Properties