J.P. Morgan books $48.1M advisory fee as REIT M&A rebound continues

J.P. Morgan Securities LLC's potential $48.1 million fee for advising Healthcare Trust of America Inc. on its $11.21 billion reverse merger with Healthcare Realty Trust Inc. would be the fourth-largest disclosed advisory fee ever on a real estate investment trust M&A deal, according to S&P Global Market Intelligence data.

Three of the five-largest disclosed REIT M&A advisory fees on record are from 2021 and 2022, as real estate property owners have resumed their transaction pace following a lull in the months after the COVID-19 pandemic struck the U.S.

Large fees on recent deals

Of the 20-largest disclosed REIT M&A advisory fees, eight have been attached to deals announced between April 2021 and February 2022. All eight fees stand to be paid to either J.P. Morgan, Morgan Stanley & Co. LLC or Goldman Sachs & Co. LLC.

Morgan Stanley landed the two largest disclosed REIT M&A advisory fees in the second half of 2021. The firm was in line to earn $68 million for advising CyrusOne Inc. on its $15 billion sale to Global Infrastructure Partners L.P. and KKR & Co. Inc. in November 2021, and $50 million for advising VICI Properties Inc. on its $17.2 billion acquisition of MGM Growth Properties LLC in August 2021.

Four of the 20-largest REIT M&A advisory fees were paid to the adviser representing the buyer. Besides the fees on the Healthcare Realty Trust-Healthcare Trust of America and VICI-MGM deals, buy-side adviser fees also included Morgan Stanley's fee for advising Weyerhaeuser Co. on its acquisition of Plum Creek Timber Co. Inc. and Realty Capital Securities LLC's fee for advising American Realty Capital Properties Inc. on its merger with Cole Real Estate Investments Inc.

Aside from J.P. Morgan's advisory fee from February, Goldman Sachs is the only other investment bank to receive an advisory fee of at least $30 million on a REIT M&A deal that was announced in 2022.

The company received $36 million for advising Preferred Apartment Communities Inc. on its $5.8 billion sale to Blackstone Real Estate Income Trust Inc. in February.

A standout on the buy side

J.P. Morgan's $48.1 million advisory fee for Healthcare Realty Trust-Healthcare Trust of America represented 0.43% of the total deal value, the fifth-largest percentage on a disclosed fee for a buy-side adviser on a REIT M&A deal with a deal value of at least $1 billion.

Morgan Stanley holds the record in the category with its $20 million fee for representing Gramercy Property Trust on its acquisition of Chambers Street Properties in 2015. The fee represented 0.80% of the $2.5 billion deal.

Post-lockdown rebound

The Healthcare Realty Trust-Healthcare Trust of America and Blackstone-Preferred Apartment transactions were among a total of four real estate M&A deals involving publicly traded equity REITs in the first quarter, a slight decrease from the five deals announced in the fourth quarter of 2021.

The first-quarter REIT deal count easily surpassed the zero deals from the first quarter in 2021, however. By deal count, the 2022 first quarter was the strongest first quarter since 2007, when there were six REIT deals announced for $21.81 billion in total deal value.