Blackstone, TruAmerica Nab $890M in Debt to Buy San Diego Rental Portfolio

The deal turned Blackstone into one of the largest apartment landlords in San Diego County


Blackstone and TruAmerica Multifamily have locked in $890 million in debt secured by more than 4,200 multifamily units within a larger portfolio in San Diego that the pair acquired this year for more than $1 billion, according to rating agency analysis of the deal. 

Morgan Stanley, Bank of America and Barclays co-originated a two-year, $800 million commercial mortgage-backed securities (CMBS) loan in the deal. The borrowers also secured $90 million in mezzanine financing to round out the debt stack, according to analysis from Fitch Ratings. It’s unclear who provided the mezzanine financing in the transaction. 

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The debt, along with roughly $231 million in equity contributed by the borrowing party, helped facilitate the purchase of 5,800 units across 66 properties from The Conrad Prebys Foundation in a deal that eclipsed $1.1 billion, according to Fitch and a source familiar with the deal. The news that Blackstone (BX) and TruAmerica were in line to buy the portfolio was reported in May.

The $800 million CMBS loan in this financing is secured by 4,202 of the apartment units, spread across 32 Class B properties in San Diego, according to Fitch.

A representative for Blackstone declined to comment on the deal, and a representative for TruAmerica was not able to comment or provide additional information prior to publication.

The deal — the largest ever in San Diego County — has morphed Blackstone into one of the leading multifamily landlords in the area. TruAmerica, which manages more than 54,000 apartment units across the U.S. and specializes in the repositioning of Class B apartment complexes, just further adds to its prowess in the county, per Fitch.

Kathleen McCarthy, global co-head of Blackstone Real Estate, told The San Diego Union-Tribune in May, once details emerged of its plans to acquire the portfolio, that the investment manager “has long been a big believer in San Diego, with multiple investments across our real estate business.” 

McCarthy has plenty of reason to believe the performance of this portfolio will match that of its belief in the city. The San Diego multifamily market has sported an average overall vacancy rate of 3.7 percent over the last two decades, with Class B product outperforming that overall vacancy figure with a 2.3 percent vacancy rate over the last five years, according to REIS data cited by Fitch. 

The average vacancy rate in San Diego sat at 4.1 percent in the second quarter, according to the REIS data cited by Fitch, which indicated that projections for the next five years have that rate remaining stable, at around 4 percent.

This portfolio — which includes apartment assets built between 1960 and 1988 — that Blackstone and TruAmerica have acquired is no exception to the broader market dynamic.

From 2016 through 2020, despite the pandemic, the entire portfolio sported an occupancy level over 97 percent, and, as of last month, in-place occupancy was at nearly 99 percent, according to Fitch. And its average rent collection rate — within 30 days of the due date — in the last year has been about 94 percent. 

Blackstone and TruAmerica are planning to inject about $10,000 per unit to renovate and upgrade the assets in the portfolio, including building exteriors and interiors and the common areas, according to Fitch.

Mack Burke can be reached at