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Brookfield Property, GGP aim to tie the knot; LaSalle Hotel rebuffs Pebblebrook


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Brookfield Property, GGP aim to tie the knot; LaSalle Hotel rebuffs Pebblebrook

S&P Global Market Intelligence offers our top picks of U.S. real estate news stories and more published throughout the week. Please note that some entries may have links to third-party sources that may require a subscription.

It's official

After months of speculation that a tie-up was in the offing, mall owner GGP Inc. and Brookfield Property Partners LP announced a deal in which Brookfield would acquire GGP for $23.50 per share, up from a previously rejected $23.00-per-share offer.

The deal consideration will be paid in cash and shares of Brookfield Property or a new real estate investment trust that Brookfield is creating. Brookfield increased the cash consideration to $9.25 billion from a previously rejected amount of $7.40 billion.

News of the merger agreement was met with almost universal disappointment in the analyst community. In comments representative of the overall reaction of the Street, Boenning & Scattergood analyst Floris van Dijkum called the deal "underwhelming" and said it "significantly undervalues GGP."

ISI analyst Steve Sakwa said the agreement "will likely not resonate well" with GGP shareholders, who could possibly reject the deal when they vote on it in coming months. Such an action would come at a cost, however, as the agreement entails a $400 million termination fee.

Strike one

GGP was not the only REIT making news in the M&A space this week. Pebblebrook Hotel Trust disclosed that its offer to take over competitor LaSalle Hotel Properties for an implied merger price of $30.00 per share was rejected. LaSalle turned down the proposed stock-for-stock transaction on the basis of both price and form of consideration. Pebblebrook indicated it is willing to negotiate on both points.

In acknowledging the proposal, LaSalle confirmed what many have been expecting and announced a 50% cut to its dividend, reducing it to 22.5 cents per share from 45 cents per share for the next three quarters.

Changing hands

Several big-ticket property transactions made news this week, including Forest City Realty Trust Inc.'s $156 million sale of the 363-unit apartment building at 461 Dean St. in Brooklyn, N.Y.

Other notable deals include Investors Real Estate Trust's acquisition of the 390-unit Westend multifamily community in Denver for $128.7 million, as well as RLJ Lodging Trust's sale of the 364-room Sheraton Philadelphia Society Hill Hotel for $95.5 million. Equity Residential reported its sale of a 155-unit apartment building on the Upper East Side of Manhattan, N.Y., for $85 million.

In Canada, Cominar Real Estate Investment Trust completed the sale of its noncore Canadian property portfolio for C$1.14 billion, and Slate Office REIT acquired a seven-property office portfolio for C$191.4 million.

Charge it

REITs hit the capital markets hard this week, with a flurry of them entering into new or amended term loans and credit facilities, many of which had capacities of $1 billion and higher.

CyrusOne Inc. boosted the size of its senior unsecured credit facility by $1 billion to $3 billion, and MGM Growth Properties LLC repriced its $1.8 billion term loan B facility.

American Tower Corp. entered into a $1.5 billion unsecured term loan, and a unit of the cell tower REIT issued $500 million of secured tower revenue securities, while shopping center landlord Regency Centers Corp. increased its unsecured revolving credit facility to $1.25 billion from $1.0 billion.

Washington Real Estate Investment Trust increased its unsecured revolver to $700 million and refinanced a $150 million term loan with a $250 million term loan, while Iron Mountain Inc. secured a $700 million term loan B facility.

Conference coverage

S&P Global Market Intelligence was on the ground in New York City at the iGlobal Forum Real Estate Private Equity Summit.

Conference Chatter: Massive take-private deal may bookend real estate cycle

Conference Chatter: Fascitelli: For big returns in New York real estate, be contrarian

Featured during the week on S&P Global Market Intelligence

BMO Capital Markets eyes role in larger REIT deals amid US expansion

Tepid reception to Brookfield-GGP deal pricing

Data Dispatch: US REITs repurchase 190 million shares in 2017