October 26, 2015 / 10:30 AM / in 2 years

Starwood Capital to buy apartment units worth $5.37 billion

Chairman and CEO of Starwood Capital Group Barry Sternlicht walks down the fourth fairway during the first round of the Pebble Beach National Pro-Am golf tournament on the Monterey Peninsula Country Club course in Pebble Beach, California, February 6, 2014. REUTERS/Michael Fiala

(Reuters) - Private investment firm Starwood Capital Group has agreed to buy 72 properties from U.S. real estate company Equity Residential (EQR.N) for about $5.37 billion.

The properties comprise a mix of 23,262 mid-rise and garden-style apartment buildings, located in regions including South Florida, Denver, Colorado, Washington D.C., Seattle and Inland Empire.

The markets have demonstrated strong rent growth of 5.4 percent annually over the last five years, and are projected to experience employment and income growth well above the forecast national average, Starwood Capital said on Monday.

Equity Residential had 98,287 wholly-owned apartment units in 2014. The deal represents about a quarter of the apartment units in the company’s portfolio.

Starwood Capital said it would control more than 88,000 apartment units following the close of the deal to become one of the largest owners of multifamily housing in the United States.

The deal is expected to close in the first quarter of 2016.

Starwood Capital has agreed to buy about 67,800 apartment units over the past 12 months, including those from Equity Residential.

Equity Residential said it intends to sell an additional 26 assets, consisting of 4,728 apartment units, in 2016.

Equity Residential plans to use the proceeds from the Starwood Capital deal to pay a special dividend of between $9.00 and $11.00 per share in the second quarter ending June.

Neal, Gerber & Eisenberg LLP was Equity Residential’s legal adviser on the deal.

Reporting by Ankit Ajmera in Bengaluru; Editing by Robin Paxton and Maju Samuel

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