AvalonBay Communities Inc. agreed to sell an 80% stake in five apartment communities, totaling 1,301 homes and encompassing 58,000 square feet of retail space in Manhattan, N.Y., for estimated net proceeds of approximately $460 million.
The multifamily real estate investment trust will contribute its fee ownership of Avalon Morningside Park, Avalon Bowery Place I and Avalon Bowery Place II, as well as its leasehold interest in Avalon West Chelsea and AVA High Line, to a newly established joint venture with an institutional client of global real estate investment manager Invesco Real Estate. The deal is based on a total asset valuation of approximately $760 million.
The joint venture intends to use secured financing at a loan-to-value ratio of about 50%, according to a release.
AvalonBay said it will retain a 20% stake and serve as the managing member and property manager for the properties, adding that it aims to use the net proceeds for general corporate purposes.
The company will update its full-year 2018 earnings in its third-quarter earnings release to reflect the expected impact of the transaction, which should close before the end of 2018.