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Brookfield eyes $3B portfolio sale; Front Yard agrees to $2.4B go-private deal

Corporate America Not Likely To Unwind COVID-19 Debt Buildup Despite Credit Hits


M&A rebound sparks optimism for near-term deal activity


Message in a (Word)Cloud

Six trends shaping the industries and sectors we cover in 2021

Brookfield eyes $3B portfolio sale; Front Yard agrees to $2.4B go-private deal

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

Healthcare real estate investment trusts face a "challenging" round of third-quarter earnings reports in the coming days, with seniors housing portfolio occupancies at record lows, Evercore ISI analysts said in a research note.

With investors concerned about falling seniors housing occupancy, healthcare REITs were down 21.6% over the course of 2020 as of Oct. 21, compared to a decline of 16.3% for the MSCI US REIT Index and a gain of 7.7% for the S&P 500, the analysts wrote.

Major companies in the sector include Welltower Inc., which is scheduled to report earnings Oct. 28; Healthpeak Properties Inc., which reports Nov. 2; and Ventas Inc., which is scheduled to report Nov. 6. Healthpeak has been the strongest performer of the three in recent months, in part because it has the lowest seniors housing exposure, but Welltower stands to benefit the most from a recovery in the sector, the analysts wrote.

A key area of focus will be the expected timeline for seniors housing portfolios to rebound to their pre-pandemic levels, they added. Over the longer term, they said questions surround how potential residents will view seniors housing in light of strict visitation policies.

The Evercore ISI team's reasons for guarded optimism on the sector include the aging of the U.S. population and an expected fall-off in construction of new seniors housing properties amid limited construction financing.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

Deals arena

* Brookfield Asset Management Inc. engaged advisers to help with the potential sale of its roughly 2.3 million-square-foot life-sciences real estate portfolio for roughly $3 billion, Bloomberg News reported, citing people with knowledge of the matter.

* Front Yard Residential Corp. agreed to be taken private in an approximately $2.4 billion deal led by a partnership of Pretium Partners LLC and Ares Management Corp.'s real estate equity and alternative credit strategies. The deal is expected to close in the first quarter of 2021, subject to approvals.

* Embattled retailer J. C. Penney Co. Inc. filed a draft asset purchase agreement covering the terms of the sale of its retail and operating assets to landlords Simon Property Group Inc. and Brookfield, as it looks to exit Chapter 11 bankruptcy. The company expects that the sale will close before the December holiday season.

* D.R. Horton Inc. acquired the homebuilding operations of its Braselton Homes Inc. for about $23 million in cash. The deal includes about 95 lots, 90 homes in inventory and 125 homes in sales order backlog, as well as the control of about 840 lots through purchase contracts.


* Sandpiper Group Holdings Inc., a unit holder of Artis Real Estate Investment Trust, received backing from Jetport Inc. against the REIT's plan to spin off its retail assets into a new REIT. In a letter addressed to Sandpiper Group CEO Samir Manji, Jetport, which owns approximately 13.3% of Artis REIT units, said it intends to vote in favor of the action plan proposed by Sandpiper and in favor of Sandpiper's five trustee nominees.

Digital partnership

* The merchant banking division of Goldman Sachs Group Inc., in partnership with a management team led by co-founders of Digital Realty Trust Inc., launched a global data center infrastructure company. Global Compute Infrastructure LP received an initial commitment of up to $500 million from Goldman Sachs Merchant Banking Division.

Pandemic's toll

* Commercial real estate investment deal volume in the U.S. dropped 57% year over year during the third quarter to $68.4 billion, according to a report by Real Capital Analytics. The slump, induced by the economic uncertainty caused by the coronavirus pandemic, affected the hotel sector the most, with transaction volume sliding 82% year over year to $1.9 billion.

Around the world

* U.K.-based property company Landsec is poised to sell about one-third of its £12.8 billion property holdings in the next few years, Bloomberg News reported, citing CEO Mark Allan. The company plans to sell approximately £1.6 billion of properties such as retail parks and hotels that are not in line with its new strategy.

* Brookfield Asset Management will buy 12.5 million square feet of offices and co-working spaces from Indian developer RMZ for $2 billion, Bloomberg News reported, citing a statement from RMZ.

* W. R. Berkley Corp. tapped Cushman & Wakefield and Eastdil to sell its flagship The Scalpel tower in London for about £820 million, Property Week reported. The 52 Lime St. property serves as the European headquarters of the insurance company.

* The Blackstone Group Inc. and Panchshil Realty and Developers Pvt. Ltd. are in discussions for the potential monetization of their joint venture assets in India through a REIT, Moneycontrol reported, citing sources with knowledge of the matter.

* Separately, Blackstone agreed to acquire India-based developer Prestige Estates Projects Ltd.'s direct and indirect interest in some commercial assets. The deal includes interests in commercial offices, retail and hotel properties, and an interest in mall management and maintenance businesses.

Earnings call coverage

With the third-quarter earnings season kicking off, S&P Global Market Intelligence reporters tuned in to conference calls hosted by some of the larger players in the real estate sector.

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