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Q2 PE real estate deal value slumps 62%; Colony in $3.5B data center partnership

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

Despite rising numbers of COVID-19 cases in several Sun Belt states, observers saw signs of fundamental strength in some commercial real estate sectors that have suffered during the pandemic.

In a survey of executives conducted in late June, the National Investment Center for Seniors Housing & Care detected increases in occupancy in the assisted living, memory care, independent living and nursing care property segments, Morgan Stanley analysts reported in a July 9 note. The pace of tenant move-ins also appeared to pick up across seniors housing segments, and more operators reported easy access to coronavirus testing.

A key question is whether rising case counts in Arizona, California, Texas and Florida would wipe out similar improvements in July, the analysts wrote.

In multifamily, meanwhile, Evercore ISI analysts said in a July 6 note that real estate investment trusts focusing on the Southeast and Southwest have outperformed their peers with coastal and geographically diversified portfolios, despite the shift in virus hotspots. While the reason is difficult to identify, "less onerous" regulations on landlords in the Sun Belt states may have made played a part by limiting tenants' ability to defer rent payments, they said.

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

The coronavirus effect tracker

* The number of private equity real estate deals in the second quarter fell by 48% compared to the first quarter, to 988, with the total deal value tumbling 62% to about $30 billion, the lowest levels since 2015, data provider Preqin said in a report.

* Data provider Reis said property owners have yet to feel the full impact of the pandemic as second-quarter vacancy rates in the apartment, office and retail sectors remained largely unchanged across the U.S.

* HFZ Capital Group LLC, Lionbridge Capital LP and other partners formed a fund with a target to raise up to $500 million to acquire shares in publicly traded REITs that were impacted by the pandemic, Bloomberg News reported. The fund has already acquired stakes in Vornado Realty Trust, Ventas Inc. and Welltower Inc.


* An investor group led by Colony Capital Inc. will form a $3.5 billion strategic alliance with Vantage Data Centers Management Co. LLC for the expansion of the latter's wholesale data centers across North America and Europe. The partnership is expected to be finalized in late July.

Property zone

* A joint venture of private equity and real estate giant The Blackstone Group Inc. and REIT Hudson Pacific Properties Inc. secured a $900 million loan from Goldman Sachs and Barclays to recapitalize a 2.2 million-square-foot portfolio of three Hollywood television and film studios and nearby offices in Los Angeles, Commercial Mortgage Alert reported.

* Transamerica Corp. is going ahead with the sale of the Transamerica Pyramid building in San Francisco under a new agreement, the San Francisco Business Times reported, citing a company spokesperson. The revised deal grants the buyers, New York developer Michael Shvo's SHVO and partners, a 10% discount on the previously agreed-upon price of more than $700 million.

* A joint venture of Pacific Investment Management Co. LLC is buying a 29-story office building in San Francisco from Juul Labs Inc. for more than $310 million, Real Estate Alert reported. The 346,000-square-foot property at 123 Mission St. was initially designed as the e-cigarette company's headquarters but remains mostly vacant as Juul decided to move to Washington, D.C.

* Armada Hoffler Properties Inc. and The We Co. unit WeWork Cos. Inc. mutually agreed to terminate the coworking company's lease for 69,000 square feet across the top two office floors of the REIT's Wills Wharf mixed-use building in Baltimore's Harbor Point neighborhood.

Change sought

* Activist investor Elliott Management Corp. criticized the performance of communications REIT Crown Castle International Corp. and proposed a series of initiatives to improve its performance and maximize value for shareholders. In response, Crown Castle highlighted the shareholder value it has added over the years and added that it firmly believes its strategy best positions the REIT to deliver value creation in the near and long term, and that it was open to continuing dialogue with shareholders.

* Hines Global REIT Inc. transferred all of its assets and liabilities to the newly created HGR Liquidating Trust, thereby completing its liquidation. In return, Hines received units of beneficial interest in the Maryland statutory trust equal to the number of its outstanding common shares as of June 30.

Around the world

* The board of U.K.-based homebuilder Barratt Developments PLC will not propose an ordinary dividend and the planned special dividend of £175 million for 2020 at the company's annual general meeting in October because of the uncertainties brought about by the COVID-19 pandemic. The company also furloughed a portion of its employees at their normal pay.

* Chinese online property brokerage Beike Zhaofang (Beijing) Technology Co. Ltd. aims to raise up to $3 billion in a U.S. IPO in the coming months, The Wall Street Journal reported, citing people familiar with the matter.

* Lavvi Empreendimentos Imobiliários SA, a joint venture of homebuilder Cyrela Brazil Realty SA and Rhea Empreendimentos Imobiliários Ltda., filed for an IPO with the Brazilian Securities Commission for its primary and secondary shares.

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US housing market: New home sales rose, existing home sales dipped in May

US REIT rent tracker: June rent collections roughly in line with May levels