In what’s believed to be one of the biggest real estate deals in San Diego County history, the Blackstone Group is partnering with TruAmerica Multifamily to purchase roughly 5,800 apartment units from a charitable foundation established by the late developer Conrad Prebys.
When news that such a deal was in the works was first reported by KPBS in February, affordable housing advocates and elected officials were concerned that it could result in a loss of low-income housing, with California’s eviction moratorium scheduled to lift on June 30.
The apartments changing hands in the deal, which are spread across 66 complexes, aren’t subsidized. But affordable housing advocates feared a new owner might renovate the units and raise rents.
In an email, Blackstone Group said it intends to invest more than $100 million renovating the properties, while keeping the majority of units affordable to residents earning 80 percent or less of the area median income.
The work — which will include upgrading common areas, addressing deferred maintenance, implementing enhanced security and providing amenities like health and wellness centers, greenspaces, and playgrounds — is expected to create over 500 local jobs.
“We will rely on economies of scale to make needed improvements to the assets while still keeping rents affordable,” said Noah Hochman, TruAmerica Multifamily’s Co-Chief Investment Officer and Head of Capital Markets, in a statement.
Hochman said Los Angeles-based TruAmerica has nearly a decade of experience owning and operating “workforce housing,” and “this acquisition adds to our already significant holdings in the San Diego area.”
Blackstone’s $378 billion real estate portfolio includes Stuyvesant Town-Peter Cooper Village, an 11,200-unit apartment community in 56 buildings on 80 acres in Manhattan. The company says 5,000 of those units are being preserved as affordable for 20 years in collaboration with the City of New York.
In San Diego, Blackstone said it will partner with a nonprofit, Pacific Housing, to provide services for residents, such as after-school tutoring and financial literacy classes.
In a statement, Pacific Housing President Mark Wiese said Blackstone and TruAmerica “have demonstrated a steadfast commitment to making life better for these residents, evidenced by their voluntary commitment to pay for these services so they remain free of charge. We are grateful for the ability to partner with them to help make that goal a reality.”
The San Diego Union Tribune reported that with a sales price of more than $1 billion, the deal makes Blackstone — which also owns Legoland and the Hotel del Coronado — one of the biggest property owners in San Diego County.
Although Blackstone Group did not confirm the reported $1-billion-plus sale price, a company representative said deal is expected to close by the end of June.
The proceeds of the sale will help the current owner, The Conrad Prebys Foundation, diversify its assets and continue to fund local projects.
“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,” said Dan Yates, president of The Conrad Prebys Foundation, 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.”
Prebys, a billionaire who made his fortune in real estate and construction, was already known as a generous philanthropist when he died of cancer in 2016 at age 82, KPBS reported at the time.