Blackstone Real Estate Buys Bluerock Residential Growth REIT Minus the SFR Home Business
Posted on 12/20/2021
Affiliates of Blackstone Real Estate signed a deal to acquire Bluerock Residential Growth REIT, Inc. (NYSE American: BRG). Blackstone will acquire all outstanding shares of common stock of BRG for US$ 24.25 per share in an all-cash transaction valued at US$ 3.6 billion. Under the terms of the agreement, Blackstone will acquire 30 multifamily properties comprising approximately 11,000 units as well as a loan book secured by 24 multifamily assets. The properties consist of garden-style assets with significant green space and resort-style amenities, built, on average, in 2000. The majority of the properties are located in Atlanta, Phoenix, Orlando, Denver, and Austin.
Bluerock Residential Growth REIT Spins Off SFR Home Rental Business
Prior to the acquisition, Bluerock Residential Growth REIT separately intends to spin off its single-family rental business to its shareholders through the taxable distribution to shareholders of all of the outstanding shares of common stock of a newly formed real estate investment trust named Bluerock Homes Trust, Inc. (BHOM), which will be externally managed by an affiliate of Bluerock Real Estate. BHOM will own interests in approximately 3,400 homes, including 2,000 through preferred/mezzanine investments, located in fast growing, high quality of life and knowledge economy markets across the United States. The Company’s shareholders will receive shares of BHOM, with a current implied Net Asset Value estimated at $5.60 (based on the midpoint of the valuation range provided by Duff & Phelps, independent financial advisor to the Company’s board of directors), for each share of Bluerock Residential Growth REIT common stock. There can be no assurance that the trading price upon a listing of BHOM will be equal to or greater than this estimated NAV.
Completion of the acquisition, which is currently expected to occur in the second quarter of 2022, is contingent upon consummation of the SFR spin-off, as well as customary closing conditions, including the approval of the Bluerock Residential Growth REIT’s shareholders, who will vote on the transaction at a special meeting on a date to be announced. The Acquisition is not contingent on receipt of financing by Blackstone.
Most members of the Bluerock Residential Growth REIT’s senior management, along with certain entities related to them, have agreed to retain their interests in the Bluerock Residential Growth REIT’s operating partnership, which will hold the assets related to the single-family rental business upon completion of the spinoff, rather than receiving cash consideration.
Advisors
Morgan Stanley & Co. LLC and Eastdil Secured LLC are the Bluerock Residential Growth REIT’s lead financial advisors with BofA Securities also serving as an advisor. Wachtell, Lipton, Rosen & Katz, Kaplan Voekler Cunningham & Frank, PLC, and Vinson & Elkins, LLP are serving as the Bluerock Residential Growth REIT’s legal counsel. Barclays and Wells Fargo Securities LLC are Blackstone’s financial advisors and Simpson Thacher & Bartlett LLP is Blackstone’s legal advisor.
Keywords: Blackstone Group LP.
