A unit of private investment firm Starwood Capital Group said it would buy Canada's Milestone Apartments Real Estate Investment Trust in a deal valued at about $2.85 billion.

Starwood Capital will pay $16.15 in cash per Milestone Apartments unit, the REIT said.

Based on current exchange rates the offer equates to about C$21.47 per Milestone Apartments unit, which is a premium of 9.2 percent to the unit's close of C$19.66 on Wednesday.

Milestone Apartments' portfolio consists of 78 multifamily residential properties, comprising 24,061 apartment units, located throughout the Southeast and Southwest United States.

The transaction implies an average price of about $120,000 per apartment unit, the REIT said.

Milestone's legal advisers are Goodmans Llp and Vinson & Elkins Llp, while Starwood's are Stikeman Elliott LLP and Kirkland & Ellis Llp.

BMO Capital Markets is Milestone's financial adviser.