Highwoods to pay $718M for office portfolio; Mack-Cali sells NJ assets

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

"The easy money has been made" by real estate investment trust investors betting on an economic recovery from the COVID-19 pandemic, Mizuho analysts said in an April 20 note.

While the reopening trade still has legs, share prices for companies that are widely expected to benefit from the recovery have already risen significantly, analysts Omotayo Okusanya and Haendel St. Juste wrote. Valuations for companies that own apartments and seniors housing properties appear "particularly stretched," they added.

Meanwhile, companies that thrived during the pandemic, including in the data center and single-family rental sectors, have lagged in the recovery during the first quarter and could play catch-up in the months ahead, the analysts said.

The recently passed $1.9 trillion coronavirus relief legislation should benefit consumer-facing property sectors such as apartments and retail, while the proposed infrastructure package appears to bode well for data center and tower REITs, St. Juste and Okusanya wrote. A proposed corporate tax increase would make REITs overall more attractive because of their tax-exempt status but could hurt office landlords' corporate tenants, they added.

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Dealing big

* Highwoods Properties Inc. agreed to pay $717.5 million, including debt assumption, to acquire seven office properties and one office real estate loan investment from Preferred Apartment Communities Inc. The deal includes 150 Fayetteville and CAPTRUST Tower in Raleigh, N.C.; Capitol Towers and Morrocroft Centre in Charlotte, N.C.; and the Armour Yards office property in Atlanta.

* Mack-Cali Realty Corp. sold a four-building office portfolio in Short Hills, N.J., for $255 million to The Birch Group in an off-market deal. The 843,300-square-foot portfolio comprises four buildings at 51, 101, 103 and 150 JFK Parkway and is 80% leased to 22 tenants.

* Office REIT SL Green Realty Corp. agreed to sell its 20.0% stake in the 71-story, 948,233-square-foot Sky luxury multifamily tower at 605 W. 42nd St. in New York City for a gross asset valuation of $858.1 million and its stakes in the property at 400 E. 57th St., also in New York City, at a gross asset valuation of $133.5 million.

Separately, SL Green's executives said on an earnings conference call that the REIT and the lenders on its One Vanderbilt Avenue skyscraper in Manhattan, N.Y., have not yet settled on the terms of a refinancing, but proceeds are expected to exceed $2.25 billion.

* The Inland Real Estate Group of Cos. paid $295 million to buy a portfolio of 11 single-tenant retail buildings totaling 748,141 square feet across Connecticut, Massachusetts and Rhode Island from Winstanley Enterprises LLC and Surrey Equities.

A setback

* Barclays PLC excused itself to act as the lead underwriter in a municipal-bond sale by prison operator CoreCivic Inc. after facing criticism from advocacy groups, Bloomberg News reported. The bond sale was set to fund the construction of two prisons in Alabama.

At odds

* Monmouth Real Estate Investment Corp. activist investor Blackwells Capital LLC nominated four independent directors to the board of the single-tenant industrial REIT. Monmouth had previously rejected an $18-per-share takeover offer by Blackwells and opted to review strategic alternatives instead.

The trendsetter

* According to a report by Real Capital Analytics, the pool of distressed real estate properties in the U.S. has started to shrink a year after the pandemic hit the country, offering fewer targets for opportunistic buyers. According to the report, roughly $36 billion in newly distressed properties entered the markets in the second quarter of 2020, but the figure declined in the subsequent quarters.

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