Extended Stay faces more heat over $6B Blackstone deal; PG&E signs $800M HQ sale

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

Real estate investment trust stocks are a "decent hedge" against the rising inflation expected for the rest of 2021, Evercore ISI analysts said — though they also noted that cyclical sectors such as materials, financial and energy have performed better than real estate in higher-inflation environments in the last decade.

The analysts compared movements in REIT shares with monthly changes in the 10-year break-even rate — a gauge of expected inflation derived by measuring the gap between yields on U.S. Treasury bonds and inflation-protected securities. They found that REIT share price movements correlated with inflation nearly 45% of the time over the last five years and 41% of the time over the last decade.

Still, the analysis suggests that generalist investors seeking to pick sectors that will rise as inflation rises may be better served by investing elsewhere, as REITs were correlated less closely with inflation over the last decade than the S&P 500 and eight other Global Industry Classification Standard sectors. Over the past 10 years, the analysis found, only consumer staples and utilities were less closely correlated with inflation than REITs.

More friction

* Tarsadia Capital LLC's three director nominees to Extended Stay America Inc.'s board joined several other parties in opposing the latter's approximately $6 billion planned all-cash sale, Reuters reported, citing a letter.

Extended Stay and its paired-share REIT ESH Hospitality Inc. are in process of being acquired by a 50/50 joint venture between funds managed by a Blackstone Group Inc. unit and Starwood Capital Group at $19.50 per paired share.

Special call

* Brookfield Property Partners LP will convene its unit holders July 16 at a special meeting to vote on the company's proposed buyout by Brookfield Asset Management Inc. Brookfield Property earlier agreed to an $18.17-per-unit buyout offer from Brookfield Asset Management, representing total consideration of $6.5 billion payable to Brookfield Property unit holders other than Brookfield Asset and its affiliates.

Property blocks

* PG&E Corp. and unit Pacific Gas and Electric Co. agreed to sell its headquarters in San Francisco to Hines Atlas US LP for $800 million. PG&E will move its new headquarters to 300 Lakeside Drive in Oakland, Calif., starting in the first half of 2022.

* Office REIT Boston Properties Inc. agreed to acquire the leasehold interest in Enterprise Asset Management's 470,000-square-foot building at 360 Park Ave. S. in Manhattan, N.Y., for $300 million, the Commercial Observer reported, citing sources.

* A fund of Brookfield Asset Management acquired the Block 24 office building in Bellevue, Wash., for $200 million. The recently completed building in the Spring District mixed-use community totals 197,959 square feet and is leased to Facebook Inc.

* Invesco Real Estate Income Trust Inc. tapped Walker & Dunlop to sell a 1,675-unit luxury apartment complex worth approximately $330 million in suburban Dallas, Real Estate Alert reported.

* Northwood Investors LLC will purchase two adjacent 11-story buildings in the SoHo neighborhood of New York City for about $325 million, The Wall Street Journal reported. The buildings comprise 180,000 square feet of office space and 60,000 square feet of retail space at the corner of Broadway and Spring Street and are more than 90% occupied by tenants including coworking giant WeWork Cos. Inc.

To the public

* Special purpose acquisition company Fifth Wall Acquisition Corp. III priced its IPO of 25.0 million class A ordinary shares at $10.00 apiece. The company is sponsored by an affiliate of property technology-focused venture capital firm Fifth Wall Ventures Management LLC, and its shares commenced trading on the Nasdaq Stock Market May 25 under the FWAC ticker.

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