Flurry of nontraded REIT deals boost M&A totals in 2020

Seventeen M&A deals involving U.S. equity real estate investment trusts were announced in 2020, totaling $34.10 billion in deal value. The figure marks an 18.9% increase over the $28.68 billion of deal value through 15 deals announced in 2019.

The 2020 deal total was boosted by a flurry of deals involving nontraded REITs.

In early September, three REITs sponsored by Resource Real Estate LLC agreed to merge, with Resource Real Estate Opportunity REIT II Inc. acquiring Resource Real Estate Opportunity REIT Inc. and Resource Apartment REIT III Inc. to create a $3 billion self-managed apartment REIT in Resource REIT Inc.

Similarly, three CIM Group LLC-managed REITs merged during the year. CIM Real Estate Finance Trust Inc. acquired Cole Office & Industrial REIT (CCIT III) Inc. as well as Cole Credit Property Trust V Inc. in separate stock-for-stock deals, while Cole Office & Industrial REIT (CCIT II) Inc. agreed to be acquired by Griffin Capital Essential Asset REIT Inc.

Other nontraded REIT consolidations included Hartman Short Term Income Properties XX's and Hartman vREIT XXI Inc.'s announced merger, as well as Pacific Oak Strategic Opportunity REIT Inc.'s merger with Pacific Oak Strategic Opportunity REIT II Inc.

The largest deal of the year came through The Blackstone Group Inc.'s recapitalization of BioMed Realty Trust Inc. In the transaction, Blackstone's Blackstone Real Estate Partners VIII LP and other co-investors sold BioMed Realty for $14.6 billion to an investor group led by existing BioMed investors.

Other large deals of the year included regional mall REIT Simon Property Group Inc.'s acquisition of Taubman Centers Inc. After including Taubman's existing debt, S&P Global Market Intelligence calculated total transaction value at just under $7.50 billion.

Single family rental REIT Front Yard Residential Corp. also announced it would be taken private in a $2.5 billion deal involving Pretium Partners LLC and Ares Management Corp.

When looking at the way in which REIT deals were financed in 2020, the majority of consideration came through cash as opposed to common stock, whereas the opposite was true the year prior in 2019.

Cash represented 64.3% of the total deal consideration in 2020, while common stock totaled 9.2%. The high cash total stemmed largely from the BioMed Realty deal as well as Simon's acquisition of Taubman.