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Zell or Sternlicht: Who's Right?

NEW YORK CITY—Standard & Poor's and Fitch weigh in on the wisdom of Equity Residential's massive portfolio sale to Starwood Capital, and conversely the buyer's $5.365-billion bet on multifamily outside core markets.

By Paul Bubny | Updated on October 28, 2015

NEW YORK CITY—When Equity Residential announced its agreement earlier this week for a Starwood Capital Group fund to acquire 72 apartment communities for $5.365 billion, the Wall Street Journal wondered whether the deal was a sign that Equity was edging out of the sector. “Across the commercial-property sector, which includes office, retail and apartment buildings, growing numbers of investors have begun to question how long good times can last after a steep run-up in prices since the downturn,” the WSJ reported, and quoted EQR founder Sam Zell as saying the company has been “less aggressive as buyers of assets” in recent years.

Yet the article also quoted Barry Sternlicht, founder and chairman of Starwood Capital, as bullish on multifamily. “This is the healthiest US apartment market in my lifetime,” Sternlicht told the WSJ. “We don’t see that trend reversing.” His company has acquired or agreed to acquire more than 67,000 apartment units in the past year, including the 23,262 in the EQR portfolio

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