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WeWork CEO eyes IPO plan revival; Blackstone in $1.2B deal for Simply Storage

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WeWork CEO eyes IPO plan revival; Blackstone in $1.2B deal for Simply Storage

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

Real estate investment trust earnings season picked up in earnest this week, and the hard-hit office segment showed some promise for gradual improvement amid the coronavirus pandemic.

"The formation of a low point is becoming visible for office activity in the rearview mirror, and looking ahead, leasing should be set for modest, incremental improvement," Baird analysts David Rodgers and Nicholas Thillman wrote in a research note on Cousins Properties Inc., whose lease prospect list increased substantially in the third quarter.

However, the medium-term view from the epicenter of the U.S. office market, New York City, remains foggy. Sublease space is on the rise, challenging landlords with even a strong value proposition. "As far as trends [go], it's really early to say," Thomas Durels, executive vice president of real estate at Empire State Realty Trust Inc., said on an earnings call. "There's a limited amount of leasing activity. Certainly, we're operating on lower volumes than this time last year. And so I'd be hesitant to say where the trend is exactly."

Boston Properties Inc.'s management had a similar read on New York City and the other major urban markets in which it operates. The team expects economic conditions overall to remain sluggish through the first half of 2021. President Douglas Linde said there is not enough data yet to tell where rents are heading.

"Nobody knows," Linde said on Boston Properties' earnings call. "There are just simply too few transactions to have occurred to really have any sense. And I don't think it's because there's not pent-up demand for leasing activity. I think it's because the health crisis has just prolonged people's decision-making."

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

WeWork vows to come back strong

* Coworking giant WeWork Cos. Inc. will revisit its IPO plan once it becomes profitable, Bloomberg News reported, citing CEO Sandeep Mathrani. The We Co. unit expects to achieve profitability and generate free cash flow by 2021, the executive said.

Tying the knot

* Blackstone Real Estate Income Trust Inc., a subsidiary of real estate and private equity giant The Blackstone Group Inc., agreed to acquire Simply Storage Management LLC from Brookfield Asset Management Inc. for about $1.2 billion. Simply Storage Management, doing business as Simply Self Storage, privately owns and operates a portfolio of self-storage facilities totaling 8 million square feet across the U.S.

* Shareholders of Jernigan Capital approved the approximately $900 million sale of the self-storage company to affiliates of NexPoint Advisors LP at a recent special meeting.

Big property play

* Gaming & Leisure Properties Inc. agreed to buy the real property assets of Dover Downs Hotel and Casino in Delaware from Twin River Worldwide Holdings Inc. in a sale-leaseback for $144.0 million. The company will separately reacquire the real property assets of Tropicana Evansville in Indiana from Caesars Entertainment Inc. for approximately $340.0 million, while the property's operating assets will be sold to Twin River for about $140.0 million.

* CubeSmart will buy a portfolio of eight self-storage properties in New York City from Storage Deluxe for $540 million. The portfolio is spread across Brooklyn, Queens and the Bronx, totaling 780,425 rentable square feet.

* JP Morgan Asset Management is looking for buyers for its 49% stake in the 44-story 605 Third Ave. office building in Manhattan, N.Y., The Real Deal reported, citing marketing materials. The JPMorgan Chase & Co. unit plans to sell the stake in a deal that would value the asset at approximately $600 million.

Alternative options

* Sandpiper Group Holdings Inc. and its affiliates asked Artis Real Estate Investment Trust to cease plans for its retail REIT spinoff. The activist investor informed the trustees and management of Artis REIT that approval of the spinoff by the unitholders was highly unlikely as more than 35% of the outstanding units were in favor of rejecting the retail REIT spinoff.

* After weighing the consequences of the coronavirus pandemic in its core markets, Canadian office REIT Inovalis Real Estate Investment Trust established a special committee of its independent board members that will review and study strategic alternatives available to the company to boost unitholder value.

Around the world

* Industrial landlord Prologis Inc. sold a portfolio of 22 stand-alone buildings totaling 4.3 million square feet, and land, in the U.K. for £473 million to real estate funds managed by Blackstone.

* Aldar Properties PJSC will take on the management and development of $8.2 billion of projects per the memorandum of understanding signed with Abu Dhabi investment company ADQ, formerly known as Abu Dhabi Developmental Holding Company PJSC.

* Activist investor Glass Lewis & Co. LLC recommended that shareholders of Unibail-Rodamco-Westfield approve the French REIT's planned €3.5 billion capital increase at its upcoming extraordinary general meeting. The firm advised against the proposed appointment of three new members to Unibail's supervisory board that were suggested by a group of activist investors.

* Brookfield Asset Management raised €1.14 billion at the close of Brookfield European Real Estate Partnership SCSp, its inaugural European core-plus real estate fund.

* Al Mal Capital PSC-managed Al Mal Capital REIT received regulatory approval to launch an IPO of 500 million units in Dubai, United Arab Emirates, at 1 UAE dirham each. The subscription period for the IPO is Nov. 8 to Nov. 19, and the company expects the units to be listed on Dubai Financial Market PJSC in 2021.

Earnings call coverage

As the third-quarter earnings season progressed, 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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