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Court OKs J. C. Penney deal with Simon; CBRE blank check company files $400M IPO


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Court OKs J. C. Penney deal with Simon; CBRE blank check company files $400M IPO

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

Real estate investment trust stocks, including those in the hard-hit office and retail segments, spiked early in the week some as much as 30% on the promise of an effective coronavirus vaccine coming to market, before trading off those interim highs.

Even shares of Simon Property Group Inc., the dominant class A retail REIT with a "fortress" balance sheet, faded after the initial pop. On the regional mall landlord's third-quarter earnings call, management described still-challenging conditions for even the nation's highest-quality retail properties. Rent collections improved in the third quarter, but several large national retailers still refuse to pay even though they are back in operation. Same-store net operating income plummeted 24.4% during the quarter.

"I think we're making basically all the right moves, but we can only deal with what we can deal with," Simon Property Chairman, President and CEO David Simon said. "I don't know if further restrictions [on visiting properties] will be in order."

Analysts still saw reason for optimism in the REIT's third-quarter results, however. BMO Capital Markets' John Kim noted that third-quarter tenant sales were down only 10% year over year and that foot traffic and rent collection increased relative to the second quarter. Cash flows likely will continue to improve into 2021 as market conditions normalize, he said.

"Although structural questions on retail will continue, we believe SPG is well placed to thrive long term given its high-quality, diverse portfolio and fortress balance sheet," Kim said.

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Merger matters

* Troubled retailer J. C. Penney Co. Inc. received approval from the U.S. Bankruptcy Court for the Southern District of Texas for the asset purchase agreement with its first-lien debt lenders, Simon Property and Brookfield Asset Management Inc. The deal is expected to close in late November, subject to additional closing conditions.

* SmartStop Self Storage REIT Inc. and Strategic Storage Trust IV Inc. signed an all-stock merger agreement under which Strategic Storage will merge with a newly formed unit of SmartStop to create a company with approximately $1.5 billion worth of self-storage assets. The portfolio of the new company will comprise 136 wholly owned properties.

* Hartman Short Term Income Properties XX decided to merge with and into Hartman vREIT XXI Inc. in a stock-for-stock transaction upon the conclusion of a review. The companies received approvals from their respective boards and expect the deal to be reached within the next few months.

* Shareholders of CTO Realty Growth Inc. approved its merger with and into a wholly owned subsidiary, CTO NEWCO REIT Inc. The merger is part of the company's plan to convert into a REIT.

IPO zone

* CBRE Acquisition Holdings Inc., a blank check company of global real estate services provider CBRE Group Inc., filed for an IPO of up to 40.0 million of its securities at $10.00 apiece. The blank check company was formed by the real estate services firm to acquire a mature privately held company with ample growth potential.

Around the world

* Shareholders of French REIT Unibail-Rodamco-Westfield turned down the company's proposed capital increase by rejecting the proposal to delegate authority to the company's management board with respect to the issuance of ordinary shares with preferential subscription rights. The capital increase plan was part of Unibail's over €9.0 billion proposal to reduce leverage.

* Funds affiliated with The Blackstone Group Inc. paid $1.1 billion to acquire a 70% stake in the largest urban logistics park in China's Greater Bay Area from Guangzhou R&F Properties Co. Ltd. The deal involves the 1.2 million-square-meter Guangzhou International Airport R&F Integrated Logistics Park that is leased to numerous blue-chip tenants.

* Brookfield Asset Management Inc. is planning to list a REIT in India before the end of 2020, Bloomberg News reported, citing people familiar with the matter. The asset management company is looking to raise up to 38 billion Indian rupees via the offering.

* Connells Ltd. indicated an intention to buy British real estate services company Countrywide PLC for £2.50 per share in cash, offering a 72% premium to Countrywide's closing price of £1.45 per share on Nov. 6. Connells has until Dec. 7 to announce a firm intention to make an offer for Countrywide.

* China Evergrande Group terminated its four-year plan to reorganize with Shenzhen Real Estate and list its Hengda Real Estate Group Co. Ltd subsidiary in Shenzhen, China.

* Separately, Evergrande Property Services Group Ltd., the property management unit of China Evergrande Group, intends to seek approval for its between US$2 billion and US$3 billion planned Hong Kong IPO as soon as the week of Nov. 9, Bloomberg News reported, citing people familiar with the matter.

* Swedish property company Samhällsbyggnadsbolaget i Norden AB (publ) is acquiring Sveafastigheter Bostad AB for 2.77 billion Swedish kronor, with closing expected Dec. 15.

Earnings calls coverage

As the third-quarter earnings season approached the close, 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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