DALLAS—An affiliate of Lone Star Funds will take apartment REIT Home Properties Inc. in a deal valued at approximately $7.6 billion including debt. When the merger is finalized, Home Properties will sell up to six multifamily properties in the Washington, DC area to UDR Inc., a Highlands Ranch, CO-based apartment REIT.

This is Lone Star's second large apartment purchase recently, and follows the 2014 acquisition of a 64-property, 20,439 unit portfolio. Hugh J. Ward III, co-head of real estate investments at Dallas-based Lone Star, say the deal for Rochester, NY-based Home Properties is “consistent with our strategy of buying primarily class B apartments, including workforce housing, located in in-fill markets with strong underlying fundamentals.”

Home Properties' portfolio includes 121 apartment communities totaling 41,917 apartment units on the East Coast and the Chicago metro area. The deal is expected to close in the fourth quarter.

BofA Merrill Lynch acted as financial advisor to Home Properties, with BofA Merrill Lynch and Houlihan Lokey providing fairness opinions to the Home Properties board in connection with the transaction. Goldman Sachs acted as exclusive financial advisor to Lone Star. Hogan Lovells US LLP acted as legal advisor to Home Properties. Gibson, Dunn & Crutcher LLP acted as corporate legal advisor; Hunton & Williams LLP acted as real estate legal advisor; and Skadden, Arps, Slate, Meagher & Flom LLP acted as tax legal advisors to Lone Star. Sidley Austin LLP acted as legal advisor to BofA Merrill Lynch, and Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Goldman Sachs.