ROCHESTER, NY—Shares of Home Properties ceased trading after the markets closed Wednesday, as the locally based apartment REIT completed its transition to private ownership. Dallas-based Lone Star Funds had set Wednesday as the date to close on its $7.6-billion purchase of Home Properties, including the assumption of debt.
As GlobeSt.com Erika Morphy reports, the closing of the Lone Star acquisition of Home Properties also meant the finalization of UDR Inc.'s agreement to acquire six properties totaling more than 3,200 units from Home Properties, a deal that Highlands Ranch, CO-based UDR is funding in part through a 1031 exchange. The UDR deal brings Home Properties' portfolio down to 36,341 apartment units across 108 properties, located mainly on the East Coast and in the suburbs of Chicago.
When the Home Properties sale was first announced in late June, it offered the first evidence that REIT valuations had shifted enough to make them attractive to private equity firms such as Lone Star, GlobeSt.com reported earlier this week. Lone Star's deal for Home Properties has since been followed by two pending REIT privatizations by the Blackstone Group: Strategic Hotels & Resorts, first announced last month; and, earlier on Thursday, an $8-billion agreement to acquire BioMed Realty Trust. In late July, Blackstone took retail REIT Excel Trust private for approximately $2 billion, in a deal first announced this past April, simultaneously with its agreement to acquire much of GE Capital's real estate portfolio.
This is Lone Star's second large apartment purchase within the past year, and follows the 2014 acquisition of a 64-property, 20,439 unit portfolio for $1.8 billion from DRA Advisors LLC and Bell Partners Inc. When the Home Properties sale was announced, Hugh J. Ward III, co-head of real estate investments at Lone Star, said the deal was “consistent with our strategy of buying primarily class B apartments, including workforce housing, located in in-fill markets with strong underlying fundamentals.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
