Monogram Residential Trust, Inc. (NYSE: MORE), an owner and operator of apartment communities primarily located in coastal markets, agreed to be acquired by a newly formed perpetual life fund, Greystar Growth and Income Fund, led by Greystar Real Estate Partners in a transaction valued at $3 billion, including debt to be assumed or refinanced.

Investors in the new fund include Dutch pension fund APG Asset Management NV, Singapore-based global investment firm GIC, and Quebec-based CRE investor Ivanhoé Cambridge.

Based in Plano, TX, Monogram owns a portfolio of investments in 49 multifamily communities in 10 states totaling 13,674 units.

A ranking of the largest US apartment owners by the National Multifamily Housing Council for 2017 lists Charleston, SC-based Greystar as the 19th largest owner with 44,037 units. Greystar is also ranked as the largest apartment manager with 415,634 units under management.

Under the agreement, which was unanimously approved by Monogram’s board, stockholders will receive $12 per share in cash, a premium of 22% to Monogram’s closing stock price of $9.80 on July 3.

The $3 billion value includes Monogram’s share of its two institutional co-investment joint ventures with PGGM and NPS. The PGGM joint venture will be restructured, and the joint venture interests held by NPS will be purchased by Greystar under a separate assignable purchase and sale agreement for approximately $500 million.

“Through this transaction, Monogram will transition from being a publicly traded REIT to a privately held company and a part of the Greystar organization,” Mark T. Alfieri, CEO of Monogram wrote to employees yesterday announcing the news. “We believe this transaction provides our stockholders with immediate and compelling value for their investment, and reflects the hard work and dedication of all the employees at Monogram.”

“We are excited to add Monogram’s high quality assets in some of the best markets in the country as the seed portfolio for Greystar Growth and Income Fund, LP, our flagship core-plus perpetual life vehicle,” said Bob Faith, the founder and chairman of Greystar.

The transaction is not contingent on receipt of financing by Greystar. JPMorgan Chase Bank, N.A. has provided a commitment letter to Greystar Growth and Income Fund for $2 billion in debt financing for the transaction.

The Greystar fund retained Walker & Dunlop Inc. (NYSE: WD) to secure financing for its acquisition. This will be the largest transaction in Walker & Dunlop’s history.

Apartment REIT valuations stand near all-time highs, despite steady new supply that remains a near term headwind, according to initial analysis of the deal by Morgan Stanley Research.

“We think the transaction continues to illustrate that private investors are looking past near term supply headwinds and are more optimistic about the longer term outlook given supportive fundamentals,” Morgan Stanley Research reported.

Morgan Stanley is serving as exclusive financial advisor. Morrison & Foerster is representing Morgan Stanley in the financing. Goodwin Procter LLP is serving as legal advisor to Monogram. J.P. Morgan Securities LLC is serving as exclusive financial advisor and Jones Day is serving as legal advisor to Greystar.

The transaction, which is expected to close in the second half of 2017, is subject to approval by Monogram’s stockholders and other customary closing conditions.

By Mark Heschmeyer July 5, 2017