30 Jul, 2021
Independence, Steadfast enter $7B merger; CBRE buys stake in Turner & Townsend
By Abdullah Khan and Saadoon Minhas
S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.
Deal volume in the U.S. commercial real estate market appears to have emerged from the COVID-19 storm and may even be on a path to surpass pre-pandemic levels, according to Real Capital Analytics, which found that market activity in the second quarter of 2021 was higher than the average total for the five years prior to the pandemic. The average second-quarter investment volume from 2015 to 2019 was $127.2 billion, and the $144.7 billion figure for the recent quarter surpassed that average by 14%.
Real Capital Analytics pointed out that the boost was not due to any singular large individual asset or portfolio sale, but a higher number of individual asset sales. At $111.0 billion, individual asset sales in the second quarter of 2021 were 17% higher than the average second-quarter individual asset sales between 2015 and 2019.
Compared to 2020 second-quarter figures, deal volumes showed triple-digit increases for most segments such as retail, industrial, apartments and senior housing, with the hotel segment — perhaps the worst afflicted among all property types — logging a 1,718% year-over-year increase in second-quarter sales volume at $14.4 billion. Offices were up 92%.
The recovery has not been evenly spread, with investors heavily targeting multifamily communities located outside major metropolitan areas. Manhattan, N.Y., which had the second-highest volume in 2019, has fallen to 11th place in the first half of 2021, according to the report. Areas that saw population growth during the pandemic have had the strongest commercial property markets this year, including Dallas, Atlanta, Phoenix and San Antonio, among others, according to Real Capital Analytics.
M&A front
* Independence Realty Trust Inc. and Steadfast Apartment REIT Inc. agreed to a business combination to create a company with an expected pro forma equity market capitalization of about $4 billion and pro forma total enterprise value of about $7 billion. The deal is expected to close during the fourth quarter.
* CBRE Group Inc. agreed to purchase a 60% stake in Turner & Townsend PLC for about £960 million, or $1.3 billion, in cash, with 55% to be paid upon deal closing. The transaction, expected to close in the fourth quarter, values Turner & Townsend at about £1.6 billion, or $2.2 billion.
* Brookfield Asset Management Inc. completed the privatization of Brookfield Property Partners LP by acquiring all of the limited partnership units of Brookfield Property and the exchangeable limited partnership units of Brookfield Office Properties Exchange LP.
Joint ventures
* Single-family real estate investment trust Invitation Homes Inc. plans to acquire about 7,500 new homes over the next five years that will be designed and developed by homebuilder PulteGroup Inc. as part of a new strategic relationship between the companies.
Shareholder meetings
* Starwood Capital Group affiliate Starwood Real Estate Income Trust Inc. urged Monmouth Real Estate Investment Corp. shareholders to vote against Monmouth's proposed sale to Equity Commonwealth at the upcoming special meeting Aug. 17.
* Griffin-American Healthcare REIT III Inc. and Griffin-American Healthcare REIT IV Inc. will hold a special meeting of stockholders and an annual meeting of stockholders, respectively, on Sept. 30 to vote on the companies' pending merger.
Property blocks
* Washington Real Estate Investment Trust wrapped up the sale of 12 office assets, representing its entire office portfolio excluding Watergate 600 in Washington, D.C., for gross proceeds of $766 million.
* Boston Properties Inc. entered the Seattle market after agreeing to buy the 50-story, 800,000-square-foot Safeco Plaza in Seattle for about $465 million. The REIT aims to complete the deal through a recent joint venture and expects to own up to a 51% interest in the venture, Boston Properties disclosed in its second-quarter earnings release.
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