(Reuters) -Preferred Apartment Communities Inc said on Wednesday a Blackstone Inc unit would buy it in a $5.8 billion deal, as the world’s biggest alternate asset manager ramps up investments in the red-hot U.S. housing sector.
Blackstone Real Estate Income Trust’s (BREIT) all-cash offer of $25 per share is nearly 40% higher than Preferred Apartment’s stock close on Feb. 9, a day before media reports on the company exploring strategic options including a sale.
The real estate investment trust’s shares shot up 7% to $25.04 before the bell following the news.
Blackstone’s offer comes at a time when a strong economic recovery, ultra-low interest rates and continued demand for bigger homes have driven up home prices in the United States. The private equity giant also bought Home Partners of America in a $6 billion deal last year.
Preferred Apartment Communities is a rental apartment owner that primarily owns and operates multifamily properties, with investments in grocery-anchored shopping centers as well.
BREIT invests in stabilized, income-generating U.S. commercial real estate across key property types including residential, industrial, hotel, retail and office.
The terms of the deal include a 30-day “go-shop” period expiring on March 18, during which Preferred Apartment is allowed to seek alternate bids.
The deal is expected to close towards the second quarter of this year.
(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Devika Syamnath)