AIR Communities Announces Two JVs Valued at $1.2B
The JV partners are committed to additional investments.
Apartment Income REIT announced two joint ventures with two major real estate investors to recapitalize 11 properties valued at $1.2 billion. AIR will receive $600 million in proceeds consisting of cash and debt relief as well as asset and property management fees that are expected to contribute $2.5 million in annual margin.
When the transactions are completed, AIR’s total indebtedness to its earnings before interest, taxes, depreciation and amortization or EBITDA, will be less than 6:1, which will provide capacity for gradual acquisitions. AIR’s portfolio currently consists of 75 communities with close to 26,000 apartment homes in 10 states and the District of Columbia.
The first joint venture will give AIR a 53% ownership interest in the partnership and the global institutional investor a 47% stake. The portfolio consists of 10 AIR properties with 3,093 units with monthly revenue averaging $2,457 and located in Philadelphia, Denver, San Diego, South Florida and Washington, D.C.
The second joint venture will give AIR a 30% ownership interest in the partnership and a global asset manager a 70% stake in Huntington Gateway, a 443-unit property in Alexandria, Va. The apartment homes are described on the community’s website as being two-bedroom, 2 ½-bathroom townhomes with new kitchens and bathrooms, a heated indoor/outdoor pool, fitness center and sports courts.
AIR will maintain responsibility for property and asset management with both ventures.
Each partner is also committed to investing alongside AIR in future acquisitions. One partner will focus on core opportunities and the other on value-add possibilities. Citigroup acted as the exclusive financial advisor to AIR on the joint venture with the global institutional investment.
The joint venture transactions are subject to customary closing conditions. Closings are expected during the second quarter, except for two properties that require regulatory approvals. Those are expected to take place before year-end.