A real estate expert says Blackstone’s proposed US$3.5-billion acquisition of Tricon Residential shows that real estate deals are out there, even in a sluggish economy.

On Friday, Blackstone announced it entered into an agreement buy the Toronto-area landlord as the firm moves further into single-family rental housing.

Josh Varghese, real estate advisor and board member of Trez Capital, said the move makes sense for both parties, as Tricon looks to grow outside of the public market and Blackstone looks to housing in a tight market.

“I think what it shows is that there’s demand for high-quality real estate even in this environment,” Varghese told BNN Bloomberg in a Friday television interview.

“I think what’s happening is macroeconomics and the interest rate environment has settled out a little bit.”

Varghese said rental property plays are considered higher quality investments at the moment due to the tight housing market, while enclosed malls and some office space is less attractive, as people focus their shopping online and offices sit vacant with the growth of hybrid or remote work.

“There are other types of real estate that are really well positioned this new environment,” he said. “This new environment is one of a shortage of housing all throughout North America, so if you own real estate and you can provide a good service to tenants, then you’re in a good spot from an investment perspective.”

Haendel Emmanuel St. Juste, managing director of Mizuho Americas, agreed that Tricon’s place in the housing sector made it an attractive acquisition target.

“Tricon operates in a sector where we think there’s very good underlying fundamentals, housing in the U.S. has been undersupplied for a number of years,” he said.

Meanwhile, analysts from TD Bank called the deal price “fair but not overly compelling,” in that it fits mid-point of the company’s valuation.

St. Juste also said the deal seems appropriate for Tricon shareholders.

“From a Tricon investor perspective, to get this premium, to get an offer that puts you right within the strike zone of two larger U.S. peers are trading, to us screams fair,” he said.

With files from Bloomberg News