S&P Global Market Intelligence offers our top picks of real estate news stories and more published throughout the week.
Analysts at Robert W. Baird see potential for real estate investment trusts to produce total returns of 10% or more, driven by normalizing business conditions and support from debt capital markets.
In a Feb. 4 note, the Baird team cited opportunities in the office, hospitality and net-lease sectors. The sector stands to benefit from rising inflation, though secular gains in subsectors like data centers and industrial appear to have "a much more substantial and lasting impact" on the overall REIT space, they added.
REIT BBB-rated bond risk premiums are now tighter than at pre-pandemic levels, at 115 basis points over the 10-year U.S. Treasury bond yield, the bond analysts noted. Tightening risk premiums are typically an indication that investors see decreasing risks in holding a given asset. With spreads tighter, all-in borrowing costs for 10-year unsecured real estate debt now stands at 2.23%, the analysts said.
* A unit of communications REIT SBA Communications Corp. agreed to buy wireless license agreements pertaining to over 700 transmission towers for $973 million from PG&E Corp. unit Pacific Gas and Electric Co. The deal is set to be completed in early 2021 and does not include the sale of any transmission towers.
* Cottonwood Communities Inc. will acquire three of its nontraded affiliates, Cottonwood Multifamily REIT I Inc., Cottonwood Multifamily REIT II Inc., and Cottonwood Residential II Inc., in separate stock-for-stock transactions to create a $1.5 billion multifamily landlord.
* Funds managed by Stone Point Capital LLC and Insight Partners struck an all-cash deal to acquire all the outstanding share capital of CoreLogic Inc. at $80 apiece, valuing the company at about $6.0 billion. The deal is expected to close in the second quarter.
* Flexible office space provider Knotel Inc. and its U.S. subsidiaries filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The company agreed to sell the business to an affiliate of Newmark Group Inc., which separately disclosed an agreement to provide about $20 million in cash as debtor-in-possession financing to support Knotel through the bankruptcy process.
Around the world
* Brookfield Asset Management Inc.'s Brookfield India Real Estate Trust raised 17.10 billion rupees ahead of the Feb. 3 launch of its proposed IPO by allotting 62,180,800 shares to anchor investors at 275 rupees apiece. The REIT is looking to raise 38.00 billion rupees from the public offering that will run until Feb. 5.
* The board of Norwegian real estate company Entra ASA recommended that its shareholders reject the separate takeover offers from Swedish real estate companies Castellum AB and Samhällsbyggnadsbolaget i Norden AB (publ). Fastighets AB Balder and The Government Pension Fund - Norway, which hold more than 30% of Entra's stake, announced their intentions to reject the offers.
* Thor Equities LLC sold a seven-property U.K. logistics portfolio for £303 million, The Real Deal reported. The portfolio is leased to several tenants including DHL, British Gas, Clipper Logistics, Sainsburys, Beko and DSV.
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NAV Monitor: US equity REITs trade at median 4.2% discount to NAV as of Feb. 2