Blackstone Buying San Diego Apartment Portfolio for More Than $1 Billion

Blackstone Buying San Diego Apartment Portfolio for More Than $1 Billion

Investment Giant Teaming With TruAmerica Multifamily To Acquire 66 Properties From Late Developer’s Estate

The Conrad Prebys Foundation sold 66 multifamily properties including the 506-unit Bay Pointe Apartments in San Diego. (CoStar)

By Lou Hirsh
CoStar News

Real estate giant Blackstone Group is teaming with a prominent Los Angeles investment firm to purchase a 66-property apartment portfolio in San Diego for more than $1 billion, in one of the largest sales ever in the region.

Officials of New York-based Blackstone Group said the company reached an agreement to partner with TruAmerica Multifamily to acquire the portfolio that includes almost 6,000 apartments and was placed on the market earlier this year by the estate of Conrad Prebys, a prominent San Diego developer and philanthropist who died in 2016.

The apartment deal is valued at more than $1 billion, according to a person knowledgeable of the sale but unauthorized to speak about it. The price and property count would put it among the biggest deals in the San Diego region’s history.

“The Prebys deal would be the largest portfolio deal within the county borders in at least 20 years,” said Joshua Ohl, director of market analytics for CoStar Group in San Diego. “There’s been several national portfolios that have closed that included San Diego assets, just none this large confined to the county.”

The deal, which is subject to closing conditions, is expected to be completed in the second quarter. The parties did not release an exact deal price for all properties that were placed on the market by the Prebys estate and garnered interest from several potential investors. 

Blackstone said in a statement the buyers plan to invest $100 million in improvements to the properties, many of them 40 years or older and located throughout San Diego County.

They also intend to partner with management firm Pacific Housing to provide services to residents, many of whom live in units that have been maintained for years as affordable housing.

San Diego city and county officials this year asked the Prebys estate and its charitable foundation to consider selling the portfolio to buyers who planned to maintain as many of the units as possible as affordable, as the region faces a severe shortage of affordable workforce housing.

“Blackstone has long been a big believer in San Diego, with multiple investments across our real estate business,” said Kathleen McCarthy, global co-head of Blackstone Real Estate, in a statement, noting the upcoming renovations are expected to create 500 jobs in the San Diego region.

“We look forward to ensuring that these properties continue to provide the community with a high-quality rental option at a good value,” McCarthy said.

Proceeds from the sale are planned to go toward the Conrad Prebys Foundation, which supports several community programs geared to areas including economic assistance to families and culture-related activities.

“The sale of the real estate portfolio, built by Conrad Prebys himself, will enable transformational change in our community, as the proceeds of the sale will support grant distribution primarily in San Diego,” foundation President Dan Yates said in a statement. “Conrad Prebys was a sharp businessman who found true joy in the act of giving, and I believe he would be honored to see the result of his life’s work dedicated to continuing his philanthropic legacy.”