Apartment Income REIT to Merge with Blackstone – Impact on Financials

Apartment Income REIT, L.P. (AIR) has released details about its upcoming merger with Blackstone affiliates, which is set to have a significant impact on the partnership's financial metrics. Here are the key points from the press release:

  1. Ownership: After the merger, AIR will be privately owned by Blackstone affiliates, and they plan to invest over $400 million to maintain and improve the existing communities in AIR’s portfolio.

  2. Debt Financing: In connection with the merger, Blackstone affiliates anticipate AIR and/or certain of its subsidiaries to incur an aggregate of approximately $2.9 billion to $3.4 billion of debt financing at closing. This will increase AIR’s loan-to-value ratio from approximately 35% immediately prior to the closing to approximately 47% to 52% immediately following the closing financing.

  3. Distribution to Unitholders: Blackstone affiliates expect to distribute the majority of the proceeds from the closing financing to the holders of the partnership common units, with the amount of any such distribution estimated to be approximately $6 to $10 per partnership common unit. They also anticipate a further distribution from additional financing, with the amount of any such distribution expected to be up to approximately $10 per partnership common unit.

  4. Tax Consequences: The distribution of cash proceeds from the closing financing and/or the additional financing to a partnership unitholder is expected to be tax-deferred, except to the extent the amount of such cash proceeds exceeds the partnership unitholder’s adjusted tax basis of its interest in the partnership.

  5. Redemption Rights: Following the closing, the partnership will pay only cash to those holders of units who elect to redeem their units, and the company’s class A common stock will no longer be listed on the NYSE.

  6. Management Fee: Blackstone affiliates do not intend to charge the partnership any management or similar fee following the closing.

  7. Public Disclosure Requirements: AIR expects to continue being required to file periodic reports with the SEC following the closing, as it had 1,863 holders of record of partnership common units as of February 12, 2024.

The press release provides a detailed insight into the financial implications of the merger for AIR and its unitholders, outlining the changes in leverage, distribution, tax consequences, and public disclosure requirements. These figures and plans give a clear picture of the impact of the upcoming merger on the partnership's financial metrics. The market has reacted to these announcements by moving the company's shares 0.0% to a price of $38.92. For the full picture, make sure to review Apartment Income REIT's 8-K report.

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