Greystar Adds 14 Apt. Assets in $460M Deal

CHARLESTON, SC-Greystar Real Estate Partners, headquartered here, has closed on a $460-million acquisition of 14 apartment communities, located mainly in Texas. The deal effectively gets the seller, Inland American Real Estate Trust, out of the multifamily business, although the REIT remains active in student housing.

The transaction, which occurred within two Greystar-sponsored investment vehicles, was structured as a two-staged close with the second closing occurring on August 28. It values the properties at approximately $105,000 per unit.

Totaling 4,371 units, the portfolio is concentrated in markets with strong exposure to the domestic energy industry. Six of the 14 properties are located in the Houston market, where Greystar was founded in 1993 and where its portfolio already runs to more than 70 properties and 5,000 units in the city proper, along with other communities in its suburbs, a company spokesman tells GlobeSt.com.

The new acquisitions in Greater Houston include Brazos Ranch in Rosenberg; Grogan's Landing and Woodridge Park in Spring; the Parkside and Sterling Ridge Estates in the Woodlands; and Seven Palms in Webster. Four more are in Oklahoma City, where the per-unit price has set a local record. They include Legacy Woods, Legacy Corner, Legacy Crossing and Legacy Arts Quarter, all in the Sooner State's largest city.

The portfolio includes two additional assets in San Antonio—Encino Canyon and Villages at KH—and Cityville in Dallas and Southgate in Louisville, KY. Greystar is already active in all five cities.

Wes Fuller, Greystar's executive director of investments, says the Inland American portfolio “fits well within our investment strategy of acquiring assets with strong existing cash flow at values below replacement cost and in markets experiencing significant employment and population growth. We believe the assets are positioned to perform well driven by extensive renovation and operational enhancements planned by our team.”

Deals of this size are nothing new for Greystar, the spokesman says. “Greystar has sponsored many large portfolio transactions over our history which includes this portfolio on behalf of our discretionary acquisitions funds, Greystar Equity Partners VII LP and Greystar Equity Partners VIII LP,” he says. 

Earlier this year, Greystar sponsored a $1.5-billion acquisition from Equity Residential in partnership with Goldman Sachs, Ivanhoe Cambridge and another institutional investor. “We are uniquely qualified to analyze, underwrite, take over and execute large portfolios given our national platform and investor base.”

In a letter to stockholders earlier this summer, Inland American said a sale of the assets, which had performed well within its portfolio, matched its long-term strategy and would fetch more than the original total purchase price for the communities. “With the attractive pricing and potential for new multifamily developments entering our markets, the timing to sell is advantageous,” according to the stockholders letter. The company said it planned to reinvest the cash proceeds of about $200 million into multi-tenant retail, student housing and retail properties, which it believes will provide higher cash earnings than the apartment assets would have.

Even as it exited one market—Houston—from the multifamily standpoint, Inland American has made acquisitions in the hotel sector there. Last week, the company announced its Inland American Lodging Group subsidiary had acquired two Westin hotels located in Houston's Galleria District, for about $220 million. The Westin Galleria and Westin Oaks Houston total more than 900 keys as well as nearly 100,000 square feet of meeting space.