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SL Green lines up NYC property sales; self-storage REIT to sell for $900M

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

Retail real estate investment trusts' second-quarter earnings offered a glimpse into a particularly challenged corner of the commercial real estate market where tenants' ability to meet their rent obligations has eroded amid the coronavirus pandemic.

Regency Centers Corp., a shopping center landlord, had collected just 77% of its second-quarter base rent as of July 31, including executed deferral agreements. Consumers, eager to return to some version of normalcy, have recommenced "some of their prior shopping behaviors," Lisa Palmer, Regency's president and CEO, said on an earnings call.

"Despite the progress Regency and our tenants have made, we are keenly aware that there's still a lot of uncertainty ahead," Palmer said. "It is so difficult to predict the future, and we know that this situation will continue to evolve and may be more challenging as this disruption is even more prolonged."

As of early August, about 95% of Regency's retailer tenant base is open for business, up from 59% at the end of April. James Thompson, Regency's COO, described a measure of collaboration taking place between the company and its tenants to combat the impact of the pandemic. Regency is busy "crafting modifications" to lease agreements, including rent deferrals, with every one of its retailers that is currently open and operating, he said.

"I think we're now in a more rational environment. Both tenant and landlord we both have much better clarity and visibility as to needs," he said. "And we're finding good common ground for fair trade-offs between a retainment plan and non-monetary concessions to create win-win for both of us."

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

Don Wood, president and CEO of Federal Realty Investment Trust, one of Regency's peers, called the second quarter "the most disrupted quarter in this country's history." As of July 31, tenants representing 92% of the company's annual base rent were open for business. Federal Realty has taken a "really tactical" approach with respect to rent deferrals, which totaled $21 million in the second quarter, he said.

Wood said the company and its tenant base have worked together to rejuvenate foot traffic at its open-air centers. Item pick-up, in particular, has helped reassure prospective new tenants, with whom Federal Realty signed leases even during the broader economic shutdown, he said.

"That notion of partnership throughout this [pandemic] I honestly think is going to be one of the most critical parts of who wins, if you will, on the other side of this," Wood said.

Up for grabs

* New York City office heavyweight SL Green Realty Corp. was recently active, bringing a number of assets to the market.

The Amazon.com Inc.-anchored 410 Tenth Ave. office property in Manhattan is up for sale for approximately $1.1 billion, two people with knowledge of the matter told Business Insider. SL Green also plans to sell The Soho building at 110 Greene St. for up to $300 million, Commercial Observer reported, citing multiple sources.

The REIT also plans to sell a $126 million mezzanine loan in the 5 Times Square tower in Manhattan, unnamed sources told The Real Deal.

Deal-making zone

* Self-storage REIT Jernigan Capital is being acquired by an affiliate of NexPoint Advisors LP in an all-cash deal valued at approximately $900 million, including debt and preferred stock to be assumed or refinanced.

* The latest data from Preqin showed that the coronavirus pandemic hit private equity fundraising and deal-making in the North American commercial real estate market hard in the first half of 2020, with only $23 billion raised from 47 fund closures, compared with $83 billion raised from 152 funds in 2019.

Sales and leases

* Hudson Pacific Properties Inc. completed the sale of a 49% stake in its media portfolio in Hollywood, Calif., to funds affiliated with The Blackstone Group Inc.'s Blackstone Property Partners for $1.65 billion.

* Healthcare REIT Welltower Inc. sold a 34-property portfolio to the real estate private equity arm of Kayne Anderson Capital Advisors LP for an undisclosed amount.

* Vornado Realty Trust leased the entire office portion of The Farley Building in Manhattan to Facebook Inc. The project, part of Vornado's new Penn Station development, is expected to complete in phases starting at the end of 2020.

The IPO monitor

* Dallas-based Netstreit Corp. commenced its IPO of 15.5 million common shares with an offering price range of between $19 and $21 per share. The company owns single-tenant retail net leased properties in 34 states.

* Diversified REIT Presidio Property Trust plans to sell 2.0 million series C common shares with an expected IPO price of $5.00 apiece.

* Single-tenant commercial net lease REIT Broadstone Net Lease Inc. plans to raise as much as $100 million in an IPO.

* Melnick Even Desenvolvimento Imobiliário SA, a unit of Brazil-based developer Even Construtora e Inc., filed for an IPO of common shares.

* Ayala Land Inc.'s AREIT Inc. closed its IPO of 456,883,000 common shares on the Philippine stock exchange, priced at 27 pesos apiece. The Philippines' first REIT is set to make its debut Aug. 13.

Around the world

* Brookfield Asset Management Inc. is exploring a takeover of Spain's Merlin Properties, Reuters reported, citing Spanish newspaper Expansion. According to the report, Canada's Brookfield had been eyeing Merlin since before the pandemic and has now accelerated the plan as Merlin's valuation has fallen amid the pandemic.

* Real estate giant China Evergrande Group is exploring a spinoff of its property management business on the Hong Kong Stock Exchange.

* London-based retail REIT Hammerson PLC is selling substantially all of its 50% stake in European premium outlet operator VIA Outlets to joint venture partner APG Asset Management NV for estimated cash proceeds of about €301 million.

Earnings calls coverage

S&P Global Market Intelligence reporters tuned in to conference calls hosted by some of the larger players in the real estate sector.

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