Megadeals buoy CRE optimism in 2022; $750M JV targets single-family assets

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U.S. real estate investment trusts returned 43% in 2021, compared to S&P 500's 14%, raising optimism for 2022 despite challenges including high inflation, a consequential Fed rate hike and geopolitical risks, according to JLL's Capital Markets M&A and Corporate Advisory group's M&A and Strategic Transactions Monitor report.

M&A volume in the REIT space totaled a record $140 billion last year. Deals averaged $7 billion, around 2x the size seen in the past decade, said Sheheryar Hafeez, managing director of M&A and Corporate Advisory within JLL Capital Markets.

Notable transactions include the acquisition of diversified group VEREIT Inc. by retail-focused Realty Income Corp., for over $17 billion, American Tower Corp.'s $10 billion acquisition of data center REIT CoreSite Realty Corp., and the roughly $10 billion take-private of QTS Realty Trust Inc. by funds managed by private equity giant Blackstone Inc.

REITs are also growing in size, and their scaled platforms are attracting long-term capital market investors. A median REIT todays owns roughly $4.5 billion of real assets, 50% more than in 2010, the report said.

Partnerships

* Invitation Homes Inc. and Rockpoint Group LLC formed a joint venture to invest around $750 million in single-family homes across Western and southeast U.S., Florida and Texas. The venture will be capitalized with a $300 million total equity commitment and a $250 million commitment from Rockpoint.

* Welltower Inc. partnered with a joint venture between The Related Cos. LP and Atria Senior Living Inc. to develop two senior living communities in Santa Clara and Cupertino, Calif. The 191-unit development in Santa Clara and the 158-unit project in Cupertino are expected to complete in 2024.

Property moves

* Choice Properties Real Estate Investment Trust is set to sell six urban office properties across Toronto, Vancouver and Montreal, Canada, to Allied Properties Real Estate Investment Trust for a combined C$794 million, excluding transaction costs. Allied, through an affiliated entity, will pay C$594 million of the purchase price by issuing 11,809,145 class B limited partnership units at C$50.30 per unit.

* Welltower will buy three senior portfolios across Michigan, Ohio and Tennessee for around $548 million. An undisclosed entity will sell the portfolios comprising 2,787 units across 33 communities.

* SL Green Realty Corp. is in late-stage talks with Oxford Properties Group Inc. and Crown Acquisitions Inc. about the acquisition of a New York City office tower for around $440 million, The Real Deal reported March 9, citing people with knowledge of the talks. The 33-story Plaza Office tower at 450 Park Ave. spans 330,000 square feet and last sold for $545 million in 2014, the report said.

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Two February megadeals highlight US REIT M&A momentum