S&P Global Market Intelligence offers our top picks of real estate news stories and more published throughout the week.
After a year of industrial outperformance, development and same-store net operating growth in the space should "re-accelerate" going into 2021, according to a pair of Baird equity research analysts.
Industrial real estate investment trusts' leasing volume remains robust from e-commerce expansion, and the healthy fundamentals have warranted high property valuations, analysts David Rodgers and Nicholas Thillman said, rating the group at "market weight." E-commerce is a bigger driver now than it was in the pre-pandemic period, and capitalization rates continue to decline.
"Our proprietary measures … suggest that more than 70% of REIT-owned U.S. industrial [square footage] are in the midst of experiencing supply in excess of demand," the pair said in a Nov. 24 research note. "However, even with that, market vacancy is sufficiently low to suggest that over 94% of REIT assets should continue to experience positive pricing power in rents."
Rodgers and Thillman named First Industrial Realty Trust Inc. and Rexford Industrial Realty Inc. as top ideas among the industrial REITs.
New and old mergers
* The Blackstone Group Inc.'s Blackstone Real Estate Partners VIII LP and co-investors completed their $14.6 billion sale of BioMed Realty Trust Inc. to a group led by existing BioMed investors. BioMed is an owner of life science office buildings in the U.S.
* CoStar Group Inc. agreed to acquire Bethesda, Md.-based real estate technology platform Homesnap Inc. for $250 million in cash. The deal, expected to close in 2020, will increase U.S. property listings available across CoStar's brands to more than 2.6 million from approximately 1.4 million.
* Taubman Centers Inc. will schedule a special shareholder meeting to vote on its planned merger with fellow regional mall landlord Simon Property Group Inc. The Taubman board recommended its shareholders vote in favor of the transaction.
* Pretium Partners LLC and Ares Management Corp. agreed to increase the merger consideration payable to the shareholders of Front Yard Residential Corp. to $16.25 per share in cash from $13.50, valuing the single-family landlord at approximately $2.5 billion, including debt. The amendment was made after Front Yard received an unsolicited binding proposal from an unaffiliated third party to acquire all of its outstanding shares for a higher price.
IPO in, IPO out
* Multifamily real estate company Aspire Real Estate Investors Inc. rolled back its plans for a $300 million IPO, citing market conditions. The company had filed for an IPO of 15.0 million common shares, expected to be priced at $20.00 apiece.
* Real estate brokerage company Compass tapped Goldman Sachs Group and Morgan Stanley to assist with its potential IPO, expected in 2021, Bloomberg News reported, citing an unnamed source.
* Vornado Realty Trust canceled the planned sale of two office towers, 555 California St. in San Francisco and 1290 Avenue of the Americas in Manhattan, N.Y., mainly because it could not find a buyer at the desired price, The Wall Street Journal reported, citing one of the brokers and other people familiar with the matter. The landlord jointly owns the properties with the Trump family and was said to be expecting the towers to fetch up to $5 billion in a sale.
Around the world
* Evergrande Property Services Group Ltd., the property management spinoff of local property giant China Evergrande Group, is targeting as much as HK$15.81 billion from its recently launched IPO on the Hong Kong Stock Exchange. The company set the indicative per-share IPO price between HK$8.50 and HK$9.75.
* France-based hotel company Accor SA and Ennismore Capital are in exclusive discussions to strike an all-stock merger deal to create a global lifestyle hotel operator. The merged company, to operate as Ennismore, will initially have a portfolio of 12 brands with 73 operating hotels, more than 110 hotels in the pipeline and about 70 hotels under negotiations.
* Swedish real estate company Castellum AB disclosed a stake in Entra ASA and said it plans to launch a share exchange and cash offer to the shareholders of its Norwegian peer. Earlier in the week, the two companies terminated discussions regarding a potential merger after they failed to reach an agreement.
Also in the week, Entra rejected a takeover offer from another Swedish property company, Samhällsbyggnadsbolaget i Norden AB (publ), of 165 Norwegian kroner per Entra share, or 30.01 billion kroner in total.
US REIT rent tracker: Retail REIT rent collections greatly improve in Q3
Land & Buildings beefs up residential REIT portfolio; entries offset exits in Q3