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Extended Stay defends $6B deal amid growing criticism; Oaktree fund raises $4.7B

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

Extended Stay defends $6B deal amid growing criticism; Oaktree fund raises $4.7B

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

Executives at seniors housing and skilled nursing operators are growing more optimistic about the sectors' recovery from the COVID-19 pandemic, even as rent concessions aimed at attracting tenants remain common.

In a survey of 64 executives between March 8 and March 21 by the National Investment Center for Seniors Housing & Care, 85% of respondents pointed to increased resident demand as a reason for an acceleration in move-ins in the past 30 days, Morgan Stanley analyst Vikram Malhotra wrote in a March 25 note.

With roughly 90% of organizations reporting that their residents were fully vaccinated, more than one-third — up from 16% in the survey's prior iteration — now believe that their organizations' occupancy rates will return to pre-pandemic levels in 2021.

Malhotra noted, however, that roughly 60% of organizations report offering rent concessions to increase occupancy.

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

In hot water

* Extended Stay America Inc. shareholders SouthernSun Asset Management LLC, Cooke & Bieler LP and River Road Asset Management LLC plan to vote against the company's planned $6 billion sale, citing valuation and deal timing concerns, and echoing sentiments by fellow investors Tarsadia Capital LLC and Hawk Ridge Capital Management LP. A joint venture between funds managed by Blackstone Group Inc.'s Blackstone Real Estate Partners and Starwood Capital Group recently agreed to acquire Extended Stay and its paired-share real estate investment trust ESH Hospitality Inc., but the deal has already drawn a lot of shareholder objections.

Amid the growing criticism, Extended Stay said the proposed deal offers a "compelling and certain return" for the company's stockholders. The company added that it will soon provide detailed information on the background to the transaction, the alternatives considered by the boards and Extended Stay's rationale behind recommending the deal.

* Embattled regional mall REIT CBL & Associates Properties Inc. secured approval from more than 88% of voting bank lenders and 64% of voting noteholders for its restructuring plan. The revised restructuring plan, which eliminates $1.6 billion of debt and preferred obligations and reduces the interest expense significantly, among other relaxations for the company, remains subject to bankruptcy court approval.

* Another struggling regional mall landlord, Washington Prime Group Inc., is engaging with investors to weigh early interest in providing the company with a potential $150 million debtor-in-possession loan, Bloomberg Markets reported, citing unnamed sources. The REIT, impacted by the COVID-19-induced lockdown, reportedly tapped investment bank Guggenheim to aid in the bankruptcy financing talks with prospective lenders as it readies its Chapter 11 filing.

Record raised

* Oaktree Capital Management LP raised approximately $4.7 billion at the final close of its eighth real estate opportunities fund, becoming its largest real estate fundraise to date. Oaktree Real Estate Opportunities Fund VIII had a target of $3.5 billion.

Getting the needle right

* Online real estate brokerage Compass Inc. will offer 36.0 million shares of its class A common stock in its proposed IPO at an expected price range of between $23.00 and $26.00 per share. The SoftBank Group Corp.-backed company could raise up to $1.08 billion from the offering.

The property arena

* Slate Grocery REIT will purchase a $390 million, 25-property grocery-anchored portfolio covering 3,064,508 square feet in major U.S. metro markets as part of Slate Asset Management LP's $2.33 billion deal to acquire Annaly Capital Management Inc.'s commercial real estate business. The deal is expected to close in the third quarter.

* Colony Capital Inc. closed its sale of six hospitality portfolios to Highgate Holdings and a Cerberus Capital Management LP affiliate for $67.5 million in gross proceeds.

* Kaufman Astoria Studios Inc. received bids for its gated, five-acre campus at 34-12 36th St. in the New York City borough of Queens, expecting to sell it for about $600 million, Real Estate Alert reported. Hudson Pacific Properties Inc., a joint venture between Hackman Capital Partners LLC and Square Mile Capital Management LLC, and Silverstein Properties Inc. are among the bidders for the asset, The Real Deal added, citing unnamed sources.

* Tricon Residential Inc., a Canadian rental housing company, formed a 30/70, C$500 million partnership with the Canada Pension Plan Investment Board to develop multifamily rental projects in Greater Toronto. The Canadian pension fund will contribute up to C$350 million in equity capital to the partnership and Tricon will commit as much as C$150 million.

SPAC scope

* Special purpose acquisition company Modiv Acquisition Corp., set up by Modiv Inc. unit Modiv Venture Fund LLC, filed for an IPO of 10.0 million units. Modiv is a real estate, financial technology and property technology investment manager with a direct-to-consumer platform.

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Extended Stay's pandemic strength made it M&A target

US REIT rent tracker: Collections for REITs continued to improve in Q4'20