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Steadfast Companies Merging Trio of REITs

Irvine-based real estate investor and developer Steadfast Cos. plans to merge three nontraded real estate investment trusts it oversees into one combined entity with a combined $3.3 billion in real estate assets, primarily apartments.

The company said this month that its Steadfast Apartment REIT (STAR) would merge with Steadfast Income REIT (SIR) and Steadfast Apartment REIT III (STAR III) in separate transactions; the deals should close early next year.

The merger is intended to increase shareholder value by creating a larger entity whose economies of scale will result in some $21 million in increased cash flow, while giving it access to new capital and improved diversification, according to Chairman Rodney F. Emery.

The combined entity will continue to focus on multifamily acquisitions, with an increased emphasis on moderate income apartments, a product type that the company thinks will be in high demand and more resistant to recessions when compared to luxury product types.

The company’s combined portfolio will consist of 71 properties across 14 states. The average monthly rents at those properties runs $1,158, it said.

The combined REITs have some 39,000 apartment units in total; that would rank No. 23 among the country’s largest apartment owners by units, according to the National Multifamily Housing Council.

The unified REIT plans on investing $100 million to $300 million in new development opportunities per year.

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