GREENWICH, CT—Starwood Capital Group said Monday it had agreed to acquire about one-quarter of Equity Residential's apartment portfolio. Expected to close in the first quarter of 2016, the $5.365-billion deal encompasses 23,262 apartment units in 72 communities across the US.

Comprising a mix of mid-rise and garden-style apartment buildings, the portfolio's assets are located in five states, with major concentrations in South Florida, Denver, the Washington, DC metro area, Seattle and the Inland Empire. The portfolio is being sold unencumbered by existing debt.

“The size of this transaction underscores our conviction in multifamily housing's continuing ability to offer superior risk-adjusted returns,” says Barry Sternlicht, chairman and CEO of Starwood Capital. “The strong underlying demographics for apartments and positive leverage—resulting in robust cash-on-cash yields—make this portfolio a very attractive investment.”

The deal represents Starwood Capital's single largest non-hotel purchase, and also represents EQR's largest transaction since 2012, when it divided up the Archstone apartment portfolio with AvalonBay Communities. In an interview with the Wall Street Journal on Friday, EQR chairman Sam Zell said the company had become “less aggressive as buyers of assets” in recent years. Instead, Zell told the WSJ, EQR is shifting its focus away from suburban markets and into downtown urban centers.

For its part, Starwood Capital has been an active multifamily investor since the company's founding in 1991. It sold a portfolio of apartments acquired in the aftermath of the early-1990s savings and loan crisis to EQR in 1993, in exchange for a stake of more than 20% of Zell's company, which later went public. Starwood Capital has acquired or has agreed to acquire more than 67,800 apartment units over the past 12 months, including the EQR portfolio.