S&P Global Market Intelligence offers our top picks of real estate news stories and more published throughout the week.
Real estate investment trusts' second-quarter earnings season picked up speed this week, with two distinct views of the class A office market taking shape.
The office market, according to the management of Boston Properties Inc., a developer and owner of traditional office towers in major U.S. cities, remains "challenging." The company collected 98% of its office rents during the quarter, but there is uncertainty about the coronavirus pandemic's long-term effects on the market: big cities are looking at significant budget deficits, unemployment is on the rise, and companies seeking to cut costs may turn to their real estate exposure for a solution.
There is also the question of how remote work and a possible flight to the suburbs may impact office space demand in big cities, but CEO Owen Thomas characterized the former as a short-lived, pandemic-driven trend and the latter as an unlikely outcome.
"All recessions eventually come to an end, and we are confident that new space demand will return as the economy recovers," Thomas said.
The view was more favorable in the niche tech office-laboratory sector, as described by the leading public landlord in that arena, Alexandria Real Estate Equities Inc. Demand for lab space is up relative to the pre-pandemic level, with many of the REIT's tenants taking part in research and development for a coronavirus vaccine. With renewed clarity on near- and medium-term demand, Alexandria rebooted its development program. The company's shares climbed this week and even topped their pre-pandemic peak.
"[W]e're living in truly unprecedented times in history with the onslaught of a pandemic, the resultant recession and civil strife in many of our cities," Alexandria Executive Chairman Joel Marcus said. "We've seen a significant uptick, however, in demand this quarter across all of our markets, both from new and existing tenants, and that's given us, I think, good comfort."
* Authentic Brands Group LLC plans to team up with mall owners Simon Property Group Inc. and Brookfield Property Partners LP to buy all or some assets of Ascena Retail Group Inc., the bankrupt parent company of Ann Taylor, Lane Bryant and several other apparel brands, Bloomberg News reported, citing unnamed sources. Other parties competing for control of Ascena include private equity firm Sycamore Partners Management LP.
* The Capital Markets team of Jones Lang LaSalle Inc. identified more than $9 billion of multi-housing properties that are or will be up for sale over the next 30 to 45 days.
* Certain affiliates of Colony Capital Inc. and a unit of CBRE Group Inc. closed on the purchase of a roughly 80% equity stake in entities that own a portfolio of 12 stabilized, hyper-scale data centers in North America for about $1.21 billion from Vantage Data Centers.
Re-do the deals
* Nontraded data center and healthcare REIT Carter Validus Mission Critical REIT II will internalize its management in an approximately $40 million cash deal that is expected to reduce its general and administrative expenses by about $18 million on an annualized basis. The company plans to change its name to Sila Realty Trust Inc. upon completion of the internalization, expected Sept. 30.
* Healthcare REIT Ventas Inc. and Brookdale Senior Living Inc. revised their master lease agreement due to the unprecedented challenges to the seniors housing industry caused by the coronavirus pandemic. The REIT received an up-front consideration of nearly $235 million and set the base cash rent for 121 seniors housing communities at $100 million per year commencing in July, with 3% annual escalators commencing Jan. 1, 2022.
NYC REIT on NYSE
* The board of New York City REIT Inc. gave approval for the office REIT to be listed on the NYSE under the symbol NYC. The shares are expected to be listed on the exchange by Aug. 18.
Around the world
* Brookfield Asset Management Inc. selected Bank of America, Citigroup and Morgan Stanley for the planned $500 million IPO of its India REIT, Bloomberg News reported, citing unnamed sources. The REIT could list on the Mumbai bourse by the end of 2020, though IPO details could still change and more banks could join later.
* Link Real Estate Investment Trust will buy The Cabot building in London's Canary Wharf business district for £380 million in its maiden real asset investment in the U.K. Hines Global REIT Inc. is selling the 17-story freehold office building.
* Abu Dhabi National Oil Co. is considering selling a stake in its approximately $5 billion real estate portfolio to raise capital and attract foreign investors, Bloomberg News reported, citing unnamed sources. The portfolio includes its 65-floor headquarters building and other properties across Abu Dhabi, the United Arab Emirates, and employee housing at drilling sites.
Earning calls coverage
S&P Global Market Intelligence reporters tuned in to conference calls hosted by some of the larger players in the real estate sector.
Equity Residential offers rent breaks on NYC, San Francisco apartments
Alexandria Real Estate rising above the office market quagmire
Boston Properties CEO says no mass office tenant exodus to the suburbs
'Premature' to draw conclusions on work-from-home trend, SL Green CEO says
Unibail rent talks 'far from easy' as it wrestles with COVID-19-hit tenants
Taylor Wimpey CEO: Interest rates, not unemployment, to shape UK housing market
Giant retail landlord Klepierre rules out large scale move to turnover rents
US REITs raise over $3.15B though ATM offerings in Q1
US housing market: Existing home sales rebound MoM in June