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Newmark rejects Cushman's takeover bid; Marriott loses contracts for 122 hotels

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

There is promise for upside in the commercial real estate market amid the coronavirus pandemic, but investors will have to be patient with uncertainties surrounding rent collection and the periodic tenant bankruptcy, Baird's equity research team said this week in a report.

The real estate capital markets are healthy and functioning at present, and employment conditions are getting better, the team said. However, there will not likely be a "straight-line toward improvement."

"Although near-term catalysts including the election and vaccine discovery will impact REITs, longer-term drivers like investment sales activity should improve at varying rates marking a choppy recovery and supporting our near-term Market Weight view," the Baird team said.

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

The announced departure of Welltower Inc. Chairman and CEO Thomas DeRosa caught some by surprise. BMO Capital Markets analyst John Kim welcomed the fact that Shankh Mitra, the healthcare real estate investment trust's chief investment officer, COO and vice chairman, will step into the CEO role, but he questioned the suddenness of DeRosa's departure after a six-plus-year tenure as CEO and a little more than a year as chairman. Kim had not expected the succession for "a few years," he said in a research note.

"We question if Mr. DeRosa's exit indicates the Board anticipates more earnings headwinds and a potential change in strategy," Kim said.

No service

* Newmark Group Inc. rebuffed a recent approach for takeover by fellow real estate services provider Cushman & Wakefield PLC, Bloomberg News reported, citing people familiar with the matter. Newmark rejected the deal partly because it thinks Cushman has too much debt, according to the report.

Big bite

* Service Properties Trust ended the management contracts for 122 hotels with Marriott International Inc., effective Jan. 31, 2021, over Marriott's failure to make certain payments. Service Properties plans to transfer the management of 98 of the hotels to Sonesta International Hotels Corp. and sell 24 of the hotels for $153 million.

Public plain

* Airbnb Inc. is aiming to raise roughly $3 billion in its IPO planned for December, Reuters reported, citing people familiar with the matter. The vacation-rental company confidentially filed a draft registration statement in August, and plans to make its filing publicly available in November, after the U.S. presidential elections, the report added.

* Affordable housing-focused Aspire Real Estate Investors Inc. filed for an IPO of an undisclosed number of its shares to raise up to $100 million. The multifamily landlord, being spun out of Avanath Capital Management LLC, is focused on opportunity zones and acquiring existing income producing affordable and workforce multifamily properties.

* Presidio Property Trust priced its IPO of 500,000 series A common shares at $5.00 apiece. The offering is expected to close on or around Oct. 9.

Handshakes

* Pacific Oak Strategic Opportunity REIT Inc. and Pacific Oak Strategic Opportunity REIT II Inc. completed their stock-for-stock merger deal, with the merged entity having gross real estate and real estate-related assets of more than $2 billion.

* Invitation Homes Inc. formed a $375 million joint venture with Rockpoint Group LLC to invest in single-family homes to operate as rental residences. The partnership expects to deploy more than $1 billion.

Big picture

* The pandemic impacted the private real estate fundraising activity in the third quarter, with the total pooled capital declining to $21 billion as compared to $45 billion during the previous quarter, data provider Preqin said.

* Brookfield Asset Management Inc. is contemplating acquiring the 20-story building at 410 10th Ave. in Manhattan, N.Y., majority-owned by office REIT SL Green Realty Corp., Bloomberg News reported, citing people with knowledge of the matter. SL Green had been seeking $1.1 billion for the building, the news outlet noted, citing Business Insider.

* Welltower sold a portfolio of 11 seniors housing operating properties in California, Washington and Nevada for $702 million in mid-September. The REIT is also selling a portfolio of 20 outpatient medical buildings totaling 1.0 million square feet across five states in a $402 million joint venture with Invesco Real Estate Ltd., and is under contract to sell another six-property seniors housing operating portfolio in Massachusetts for $200 million.

* CA Ventures sold a 50% stake in its $4 billion U.S. student living portfolio to investment partner QuadReal Property Group.

Shareholder activism

* The board of Artis Real Estate Investment Trust rejected a proposal by unit holder FC Private Equity Realty Management Corp. that the Canadian REIT should form an independent committee to review its planned spinoff. The investor was of the view that the holders of Artis' preferred units stand to lose roughly C$235 million of equity in event of that transaction.

* Front Yard Residential Corp. investor and former Chairman William Erbey is calling on the single-family REIT to orderly liquidate assets and return capital to its shareholders.

Around the world

* Brookfield Properties LLC and Oxford Properties Group Inc. fetched £480 million from the sale of One London Wall Place development property, Property Week reported.

* EQT AB (publ) raised €1 billion at the final close of its EQT Real Estate II fund, surpassing the target amount of €750 million.

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