High-end retail tenants buying out landlords; American Healthcare prices IPO

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

Luxury retailers are buying their prime locations in New York City from their landlords to get away from paying high rents, The Wall Street Journal reported.

Kering SA, owner of fashion houses Gucci and Balenciaga, acquired a roughly 115,000-square-foot retail building on Fifth Avenue in New York City for $963 million. Prada SpA agreed to buy the building that houses its store on the same street, as well as a building next door for over $800 million.

LVMH Moët Hennessy - Louis Vuitton SE is also in talks to buy a Fifth Avenue retail space, according to the report, citing a person familiar with the matter.

The slew of acquisitions signals the desire of high-end brands to free themselves from the control of their landlords.

Retail rent on upper Fifth Avenue was the most expensive in the world, averaging $2,000 per square foot in 2023, according to the report, citing Cushman & Wakefield. Retail tenants are also subject to the biggest rent increases when renewing, given the prime location.

CHART OF THE WEEK: US home prices up in November 2023

⮞ Home prices in the US grew 5.1% in November 2023, compared to the 4.7% year-over-year gain in October 2023.

⮞ Among the 20 metro areas in the S&P CoreLogic Case-Shiller US National Home Price NSA Index, Detroit posted the biggest annual jump, at 8.2%.

⮞ Portland, Ore., was the only area that recorded an annual decline in home prices, at 0.7%.

IPO and M&A

– Irvine, Calif.-based American Healthcare REIT Inc. priced its IPO of 56 million common shares at $12 per share, the lower end of its target price range of $12 to $15 per share. The real estate investment trust is expected to raise about $672 million. The company intends to use the net proceeds from the offering to repay about $623.1 million of the amount outstanding under its credit facility.

– Florida-based homebuilder Dream Finders Homes Inc. acquired the core homebuilding assets of Crescent Ventures LLC. The acquisition includes 457 homesites, a sales order backlog of about 460 homes with a value of over $265 million, and approximately 6,200 lots under control.

Potential transactions

– Blackstone Inc. and The Worthe Real Estate Group Inc. are pitching for sale the former headquarters of retailer Forever 21 at 3880 N. Mission Road in Los Angeles, Green Street's Real Estate Alert reported. The vacant campus, spanning 1.5 million square feet across eight buildings, is expected to attract bids of $200 million. The site is fully permitted for industrial redevelopment, according to the news outlet.

– Walt Disney Co. activist investor Blackwells Capital LLC is urging the company to spin off its real estate holdings into an independent publicly listed REIT, according to a proxy filing.

US hotel performance

The average daily rate (ADR) and revenue per available room at US hotels were higher year over year during the week ended Feb. 3, STR reported, citing data from CoStar, which provides information and analytics on property markets.

ADR was at $147.99, 1.9% higher compared to the comparable week in 2023. RevPAR edged 1.7% higher to $81.69.

Occupancy, however, went down 0.1% year over year to 55.2%.

Among the top 25 markets, Seattle logged the highest increase in occupancy and RevPAR, while Atlanta saw the biggest gain in ADR.

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