Realty Income/VEREIT merger closes; EQT makes $6.8B industrial acquisition

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

So far, 2021 has seen 11 M&A deals involving publicly traded real estate investment trusts, with seven of them acquisitions by fellow REITs. The nature of the consolidatory deals reflects a confidence in their respective segments and business models, and not at all the distressed sell-offs that some were expecting during 2020, according to Nareit, the U.S.-based trade association for REITs and publicly traded real estate companies.

The acquisition prices in the agreed M&A deals are either at a premium or are consistent with pre-pandemic share prices as REITs seek to combine portfolios and aim for future growth. With the accelerated M&A pace comes a flurry of capital market activity, totaling $107 billion in IPOs, secondary debt and equity offerings so far in 2021. Total equity issuance for 2021 so far has reached $54 billion, whereas the figure for all of 2019 was $50 billion, Nareit noted. Debt issuance through secondary offerings is at $53 billion so far, compared to all of 2019 and 2020, at $63 billion and $73 billion, respectively.

M&A beat

* Single-tenant REITs Realty Income Corp. and VEREIT Inc. completed their merger, and Realty Income intends to complete the spinoff of substantially all office properties of the merged company into a new publicly traded REIT.

* Healthcare Trust of America Inc. shareholder Elliott Investment Management LP called on the REIT to seek a sale at a share-price premium, instead of pursuing a go-it-alone strategy, as the REIT evaluates strategic options.

Big ticket portfolio deals

* Private equity firm EQT AB (publ)'s real estate division sold a portfolio of U.S. industrial real estate in a deal that values the portfolio at $6.8 billion including debt to a group led by an unidentified Asian sovereign-wealth fund, Dow Jones Newswire reported, citing people familiar with the matter.

* Public Storage bought a portfolio of 56 self-storage properties for $1.5 billion.

* Ares Real Estate Group and Core Spaces LLC launched a partnership to acquire student housing properties in tier one university markets across the U.S., and acquired a portfolio of five purpose-built properties totaling around 2,700 beds with amenities. The properties are valued at more than $400 million.

Hotel sales bonanza

* Summit Hotel Properties Inc. agreed to buy a portfolio of 27 hotels in the U.S. Sun Belt region for $822 million. The deal also includes two parking structures.

* Host Hotels & Resorts Inc. sold five hotels in Georgia, California and Virginia to an affiliate of private equity firm Lone Star Americas Acquisitions Inc. for $551 million, which includes about $11 million for furniture, fixtures and equipment replacement funding.

* A Hyatt Hotels Corp. affiliate sold two hotels in Nevada and California for a total of about $500 million in the third quarter.

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