On Wednesday, global multiline insurer AIG announced that it will sell its interest in a portfolio of U.S. affordable housing assets to Blackstone Real Estate Income Trust (BREIT) for $5.1 billion in cash. The news was made public as part of a broader strategic partnership between AIG and private equity giant Blackstone, whereby Blackstone will take a 9.9 percent equity stake in AIG’s Life and Retirement business for $2.2 billion in cash.
As part of the deal, AIG also agreed to enter into a long-term strategic asset management relationship with Blackstone to manage an initial $50 billion of Life & Retirement’s existing investment portfolio upon closing of the equity investment, with that amount increasing to $92.5 billion over the next six years.
“Today’s announcement is an important milestone for AIG. Establishing a cornerstone partnership on several fronts with such a highly regarded organization as Blackstone validates the strength of our market-leading Life & Retirement business and provides it with additional growth opportunities, provides AIG with flexibility as we continue to work to separate Life & Retirement from AIG, and results in significant new capital for AIG to deploy to support our capital management priorities,” AIG President and CEO Peter Zaffino said in announcing the news.
“No longer core”
“AIG has stewarded the Affordable Housing portfolio for more than 30 years. While the highly specialized assets subject to this transaction are attractive investments, they are no longer core to AIG’s long-term investment strategy. We believe Blackstone has the right expertise and commitment to stakeholders to manage these assets going forward,” Zaffino added.
“We look forward to a productive and value-enhancing partnership with Blackstone as we continue to build momentum on our journey to become a top performing company.”
“These communities provide critical affordable housing and we look forward to being long-term owners,” said Kathleen McCarthy, Global Co-Head of Blackstone Real Estate. “We will make significant investments to improve the apartments while ensuring they remain affordable and in compliance with all rent regulations. We are committed to working with our partners in this sector to expand the supply of affordable housing.”