CHICAGO — Equity Residential has entered into an agreement to sell a $1.5 billion portfolio of multifamily assets to a joint venture of Greystar Real Estate Partners and Goldman Sachs & Co.
The Chicago-based firm’s assets to be sold includes 27 apartment communities, which total 8,010 units, located across the U.S. The deal values each apartment at approximately $187,000 per unit and a capitalization rate of approximately five percent. The transaction is expected to be completed in two separate closings, both of which will occur in the first quarter of 2013.
The assets under contract for sale are located in the following markets: Washington, D.C. and Northern New Jersey (2,105 units at $517.7 million); South Florida (1,896 units at $276.7 million); San Francisco Bay Area (711 units at $188.5 million); Southern California (720 units at $180.8 million); Phoenix, Ariz. ( 1,575 units at $180.3 million) and Denver, Colo. (1,003 units at $156 million).
Pursuant to the agreement, the joint venture has the right to exclude up to 8 percent of the value of the assets from their purchase. As a result, New York-based Goldman and Charleston, S.C.-based Greystar have the right to acquire all of the assets for $1.5 billion, but are only required to buy at least $1.38 billion.
Equity Residential, along with AvalonBay Communities Inc., is in the process of acquiring Archstone Enterprise LP from Lehman Brothers Holdings Inc. for $6.5 billion in cash and stock.
“With this transaction we will have made significant progress selling assets in our exit markets and non-core assets in primary markets to fund our share of the acquisition of Archstone,” said David J. Neithercut, Equity Residential’s president and CEO. “Demand for multifamily assets remains very strong and we are pleased that our original pricing expectations were met by this transaction.”
The stock price of Equity Residential closed at $57.70 per share at the end of trading on Monday, up from $55.69 per share at this time last year.
— Rachel Goff