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Clarion Partners Closes Sale to Keep Gables Residential

Team Led By NYC Investment Manager Tops Several Private and Institutional Bidders to Retain Control of Apartment/Mixed-Use Developer
February 18, 2015
Global real estate investment manager Clarion Partners confirmed reports in the marketplace that a group of investors headed by Clarion has acquired Gables Residential, an Atlanta-headquartered multifamily developer, owner and manager.

Operating as ING Clarion Partners, a wholly-owned subsidiary of Amsterdam-based ING Group, Clarion and a small group of institutional investors acquired Gables in 2005 for $2.8 billion including debt in one of the earliest public-to-private acquisitions of the last real estate cycle.

The transaction was one of the last major deals before the recession sent property values plunging. It is believed the decision to put Gables up for sale last year was prompted by the recent resurgence in apartment property values and the desire of Clarion's investment partners to cash out, according to sources.

Gables, now operating as a privately held REIT, manages about 35,000 apartment homes and 400,000 square feet of retail space in 60 properties across the U.S. with about 1,100 professionals, complemented by Clarion Partners’ portfolio management, research and investment management expertise.

The new ownership group led by Clarion Partners acquired Gables Residential for about $3.2 billion, according to published reports. Industry newsletter Real Estate Alert last year reported that finalists in bidding for Gables included a venture of DRA Advisors of New York and the Abu Dhabi Investment Authority; a joint venture between Greystar and Pimco; Denver-based Aimco, an apartment REIT; and CalPERS and GID Investments.

However, Clarion Partners and its CEO Stephen Furnary, which bought ING Group’s real estate investment management business in the Americas from ING in June 2011, have been widely regarded as the front-runner for months.

"Having worked closely with Gables for nearly 10 years, we’ve enjoyed our longstanding relationship with the company and look forward to the continued growth and success of the platform," Furnary, said in a statement confirming the closing. "We are excited about growth prospects for multifamily residential in the markets where Gables operates."

Those markets include a high concentration of Texas metros, including Austin, Dallas and Houston; as well as Atlanta, Boston, Denver, South Florida, Southern California and metropolitan Washington, D.C. Gables has third-party management agreement in the New York, Virginia Beach, Phoenix, Seattle, San Antonio, Charlotte, and the central/north Florida markets.

Clarion said it intends to convert Gables Residential into a perpetual life vehicle.

"The new ownership structure is designed to provide increased stability and growth that will facilitate the success of our company going forward," said Sue Ansel, CEO and president of Gables Residential.

King & Spalding and Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisors to Clarion Partners and Hodes Weill & Associates acted as financial advisor in the transaction. Eastdil Secured acted as the exclusive financial advisor to Lion Gables Apartment Fund L.P. and Gibson, Dunn & Crutcher LLP and Weil Gotshal & Manges LLP acted as Gables' legal advisors.

Please see CoStar COMPs #3234560 for more information on this transaction.
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