Fortress eyes Colony assets; Kilroy to sell San Francisco property for $1.08B

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

Real estate investment trusts in several sectors have issued optimistic spring business updates as U.S. COVID-19 case counts decline and the economy reopens, BMO Capital Markets analysts wrote in a March 10 note.

In multifamily, both Equity Residential and UDR Inc. reported offering fewer weeks of free rent on new leases to attract tenants in San Francisco, the analysts said. Among office property owners, they added, several REIT management teams believe employees will largely return to work in person when the pandemic is over, with some major tech tenants, such as Facebook Inc. in Seattle, already making reopening plans.

In self-storage, the analysts said strong operating performance is pushing property values higher, which in turn is swelling public companies' net asset values and could fuel M&A. Finally, they added, the lodging sector appears to be recovering faster than expected, with pent-up demand among leisure travelers pointing toward a strong summer travel season as restrictions ease.

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Big-ticket deals

* Colony Capital Inc. is in talks to sell its noncore assets including its wellness infrastructure portfolio to SoftBank Group Corp.-backed private equity firm Fortress Investment Group LLC, Bloomberg News reported, citing people with knowledge of the matter. The portfolio, which includes seniors housing and skilled nursing facilities, hospitals and medical office buildings, was valued at about $3.3 billion as of Dec. 31, 2020, the news outlet noted, citing filings.

* Strategic Storage Trust IV Inc. shareholders approved the company's proposed merger with fellow nontraded self-storage REIT SmartStop Self Storage REIT Inc. Strategic Storage will merge with a newly formed unit of SmartStop to create an entity with a combined gross book value of roughly $1.5 billion of self-storage properties.

* Office landlord Kilroy Realty Corp. agreed to sell The Exchange On 16th property in San Francisco's Mission Bay neighborhood for $1.08 billion. The office portion of the property is fully occupied by Dropbox Inc.

* Nuveen Real Estate is looking to sell its 1,184-unit Palomino Park Resort apartment complex in Colorado, valued at roughly $400 million, Real Estate Alert reported. The complex is 95% occupied.

* Timeshare operator Diamond Resorts International Inc. is set to be sold in a stock-based deal with a roughly $1.4 billion equity value to Hilton Grand Vacations Inc. Funds managed by private equity giant Apollo Global Management Inc. and Reverence Capital Partners LLC and other Diamond shareholders agreed to the sale, which is expected to close in the summer.

Denver foray

* Developers Conor Commercial Real Estate LLC and WHI Real Estate Partners LP sold the 290,000-square-foot Park 12 Hundred property in Westminster, Colo., to KKR & Co. Inc., marking the private equity giant's first industrial real estate purchase in the Denver market.

Changing course

* Canada-based Artis Real Estate Investment Trust canceled its plan to spin off its retail assets into a new REIT after concluding a strategic review and boosted its common unit holder distributions, among other changes, under its new business transformation plan.

Mass funding

* Temperature-controlled industrial REIT Lineage Logistics LLC received $1.9 billion in capital commitments in its latest funding round and obtained a new $2.8 billion revolving credit facility and term loan A.

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