S&P Global Market Intelligence offers our top picks of real estate news stories and more published throughout the week.
Private equity fundraising activity has been dampened but not drowned by the economic dislocation surrounding the coronavirus pandemic.
Research firm Preqin hosted a webinar June 17 during which Jesse Fahy, vice president for private capital at the firm, described a banner year for private real estate fundraising in 2019, after a decade-plus of a steady growth and maturation of the industry, tempered only recently by the onset of the pandemic.
So far in 2020, 119 private equity funds have raised $56 billion, according to Preqin data. In 2019, 412 funds raised a record $168 billion. The tally of closed funds annually has been on the decline since 2018, as capital concentration — fewer but larger funds closing larger deals — continues in the space.
"2020 obviously will not keep the same fundraising momentum going," Fahy said. "However, it is still on track to surpass the $100 [billion] mark with a strong finish to the year."
Total private equity real estate assets under management surpassed $1 trillion for the first time in 2019, and $387 billion, or 37% of total AUM, sat in dry powder as of September 2019. Private equity real estate fund managers are "in a great position for flexibility in the current market scenario," Fahy said.
Opportunistic funds, the most popular fund type in the last few years, had $127.8 billion in dry powder as of March. "During the [global financial crisis], opportunistic strategies also saw the greatest amount of fundraising within the asset class," he said. "So that large pool of dry powder could see itself increase as the year continues."
Remarkably, there has not been an uptick recently in the number of distressed funds in the market. Such funds had $10.8 billion in dry powder as of March, up only slightly from the $10.5 billion as of December 2019. "That [slight increase] may just be an issue of timing, as the pandemic came along very quickly," Fahy said. "As many fund managers can attest to, fundraising has been incredibly difficult in the time of social distancing."
Simon's done and undone deals
* The legal fight between Taubman Centers Inc. and Simon Property Group Inc. accelerated, with Taubman disputing several claims made by its rival regional mall real estate investment trust as Simon moved to terminate the proposed $3.6 billion merger between the landlords, The Wall Street Journal reported, citing a Taubman court filing.
Taubman, which has requested an expedited hearing of the case ahead of the upcoming closing date of the merger, reportedly argued that Simon is trying to "run out the clock" on the transaction, which would cause "irreparable harm" to its shareholders.
* Separately, Simon Property and Brookfield Property Partners LP could team up with Authentic Brands Group LLC to bid for bankrupt department store company J. C. Penney Co. Inc., Bloomberg News reported, citing people familiar with the matter.
The coronavirus effect tracker
* Hotel giant Hilton Worldwide Holdings Inc. is laying off about 2,100 corporate employees across the globe and extending furloughs, corporate pay cuts and reduced hours for up to 90 more days as a result of the pandemic.
* Prison REIT CoreCivic Inc. suspended its quarterly dividend and hired advisers to evaluate corporate structure and capital allocation alternatives. The REIT will also look at potential opportunities to recycle capital invested in certain leased assets, and expects to conclude the evaluation process in the third quarter.
* U.S. hotel performance for the week ended June 13 continued to be severely impacted due to the pandemic despite further signs of improvement compared to recent weeks, according to the latest weekly data from STR, which tracks the hospitality sector.
Year over year, occupancy for the week declined 43.4%, to 41.7%, while revenue per available room and average daily rate dropped 62.6% and 33.9%, respectively.
* Silverstein Properties Inc. is in advanced talks to acquire the U.S. Bank Tower at 633 W. 5th St. in downtown Los Angeles for up to US$450 million from OUE Ltd., down from an initial demand of about US$700 million, Real Estate Alert reported.
* Boston-headquartered global real estate investment management firm Rockpoint Group LLC raised $3.8 billion at the final close of its Rockpoint Real Estate Fund VI LP and $2.0 billion at the final close of the Rockpoint Growth & Income Real Estate Fund III LP.
Around the world
* A consortium including private equity giant KKR & Co. Inc. and Temasek Holdings (Pte.) Ltd. acquired an approximate 6% interest in Vietnamese integrated real estate developer Vinhomes Joint Stock Co. for 15.1 trillion Vietnamese dong.
* Shareholders of Wheelock & Co. Ltd. approved the HK$8.15 billion proposal by Admiral Power Holdings Ltd. to privatize the Hong Kong-listed property company at a June 16 annual general meeting.
* Australia's Centuria Capital Group intends to make a NZ$130 million buyout offer for New Zealand-based Augusta Capital Ltd. after rolling back an offer in March.
* China Jinmao Holdings Group Ltd., which owns 66.77% of the total share stapled units in subsidiaries Jinmao (China) Hotel Investments and Management Ltd. and Jinmao Hotel, offered to buy all the remaining units it does not already own in a HK$3.19 billion offer.
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