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September 4, 2013

Greystar Completes Half-Billion-Dollar M-F Portfolio Purchase

By Barbra Murray, Contributing Editor

Oak Park

Oak Park, Dallas

Greystar Real Estate Partners’ already substantial portfolio just got quite a bit bigger. The multi-family real estate company recently completed the acquisition of a 4,371-unit portfolio from Inland American Real Estate Trust Inc. in a deal valued at $460 million.

For Inland’s part, as described in an SEC filing, the disposition fits with the company’s long-term portfolio strategy of focusing on retail, lodging and student housing. For Greystar, the collection of properties ticks all the boxes.

“We are intently focused on acquiring assets where Greystar can create value through renovation and operational enhancements,” Wes Fuller, executive director of investments with Greystar, told Commercial Property Executive. “We target assets with strong current cash flow in markets which are experiencing significant employment and population growth at a basis below replacement cost.”

The portfolio Greystar just picked up from Inland consists of 14 apartment communities, the majority of which–six properties accounting for 1,882 units–is in Houston. Four additional assets are located in Oklahoma City, two more are sited in the San Antonio market, and rounding out the bunch are a single property in Dallas and another in Louisville. The assets span three states, but their locations have one common thread: they are markets with exposure to the expanding domestic energy sector.

Greystar made the acquisition, which was completed in two closings, within Greystar-sponsored investment vehicles Greystar Equity Partners VII L.P. and Greystar Equity Partners VIII L.P.  The company plans to shell out an additional sum of approximately $6,000 per unit on strategic property improvements.

With the closing of the Inland portfolio purchase, Greystar has added a whopping 12,381 units to its holdings through just two transactions this year. In January the company joined forces with the Real Estate Principal Investment Area of Goldman, Sachs & Co. on an agreement to acquire a group of 27 apartment properties encompassing an aggregate 8,010 residences from Equity Residential for $1.5 billion.

It’s not every real estate company that can plunk down $1.5 billion on one portfolio acquisition and a half-billion more on another just months later, but Greystar is most certainly among those that can quickly capitalize on such offerings when they become available. “Greystar has the ability to analyze, underwrite, takeover and execute on large portfolios given our platform and investor base,” Fuller added. As for finding clusters of assets that meet the company’s criteria, well, it’s nice to have friends. “We rely heavily on existing relationships to source opportunities and target assets and portfolios,” he added.

On- or off-market, the deals keep coming. Spending $2 billion on two portfolios in one year may be enough for some, but not so for Greystar. “We are working on another large portfolio on the West Coast now which we expect to close before year end,” Fuller concluded.