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REIT Replay: Extra pulp


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REIT Replay: Extra pulp

REITs and the broader markets regained lost ground Monday, May 2, as Weyerhaeuser revealeda $2.2 billion cash deal to unload its cellulose fibers pulp mills.

The MSCI US REIT Index (RMZ) rose 1.69% to 1,148.52, and theSNL US REIT Equity Index climbed 1.57% to finish at 306.68. The Dow Jones IndustrialAverage picked up 0.66% to close at 17,891.16, while the S&P 500 added 0.78%to close at 2,081.43.

Weyerhaeuser Co.struck a $2.2 billion cash deal to divestits cellulose fibers pulp mills to International Paper in a transaction anticipatedto close during the fourth quarter.

The transaction covers five pulp mills in Mississippi, Georgia,North Carolina and Alberta, as well as two modified-fiber mills in Columbus, Miss.,and Gdansk, Poland.

The deal offers "compelling value" for stockholderswhile focusing the portfolio as the company works to be "the world's premiertimber, land, and forest products company," Weyerhaeuser President and CEODoyle Simons said in a release.

Weyerhaeuser shares rose 0.50% to close at $32.28.

In other M&A news, the closing of the roughly $1.5 billionsale of 'svacation ownership business to Interval Leisure Group has been to May from an initial targetdate of April 30. The transactioncalls for the merger of Vistana Signature Experiences Inc. with an Interval Leisuresubsidiary.

The "brief delay" was meant to avoid "unnecessarytax withholding" under the Foreign Investment in Real Property Tax Act of 1980,the companies said in a release.

Shares of Starwood Hotels gained 0.29% to close at $82.12.

Meanwhile, the mergerof Medical Properties Trust Inc.'sinvestment in hospital operator Capella Healthcare Inc. with RegionalCare HospitalPartners Inc. was completed.

The health care REIT said it also closed the related prepaymentof two mortgages on Capella hospital facilities. The net proceeds from the transactionswere used to trim the company's borrowings by roughly $550 million.

Shares of Medical Properties popped 2.10% to close at $13.59on Monday.

CommunicationsSales & Leasing Inc. finalizedits acquisition of fiber-networkprovider PEG Bandwidth LLC.

The company funded the dealusing $321 million in borrowings under its revolving credit facility and via theissuance of 1 million shares of its common stock and 87,500 shares of its 3% seriesA convertible preferred stock.

Shares of Communications Sales fell 0.34% to close at $23.15.

Further, Iron MountainInc. wrapped upits acquisition of Australianpeer Recall Holdings Ltd. in a roughly $2 billion deal.

The dealexcludes Recall's operations that will be sold pursuant to regulatory agreements in the U.S., Canada and Australia.The purchase of Recall's U.K. operations remains subject to regulatory review.

Iron Mountain shares ticked 0.19% higher to $36.60.

Mizuho Securities USA Inc. analyst Richard Anderson downgradedParkway Properties "neutral" from "buy," while maintaining his stock price targetat $17.50.

The downgrade comes on the heels of the announcement that thecompany agreed to be acquiredby Cousins Properties $17.45 per share. The analyst said that although investors in general appearto support the deal, he believes it is prudent to lower Parkway's rating now, ashe does not cover Cousins. He added that a topping bid for Parkway and a changeof plan are unlikely.

Parkway shares jumped 2.98% to close at $16.94, while sharesof Cousins gained 2.71%, closing at $10.63.

In a separate note, Anderson also lowered his rating on to "neutral"from "buy" and decreased his price target on the company's stock to $238from $249, citing his updated earnings/NAV models and various broader and company-specificconsiderations.

The analyst added that while potential upside remains, he believesit is not sufficient to merit a "more constructive" outlook and that currentquestions surrounding the Bay Area markets will stall Essex's stock for the timebeing.

Essex shares gained 1.12% to close at $222.93.

American RealtyCapital Healthcare Trust III Inc., seeking to boost long-term shareholdervalue, launched an explorationof strategic alternatives.

To that end, the company said it established a special committeeof independent directors and engaged SunTrust Robinson Humphrey Inc. as financialadviser and Shapiro Sher Guinot and Sandler PA as special legal counsel.

Now featured

Data Dispatch:REITs only slightly scathed by planned Sears, Kmart closures: Although14 REITs report Sears or Kmart as a top tenant, they have minimal exposure to thelatest round of planned store closings, according to S&P Global Market Intelligencedata.

Hersha Hospitalitycloses JV with Chinese investor, after a delay: The $571.4 million venture,for seven Manhattan, N.Y., properties, could foreshadow future joint investments,executives said.

Education Realtyis buying opportunisti­cally, despite slimmer yields, execs say: Ina conference call, company executives said they also have become comfortable withslimmer development yields on properties near top-tier universities.

Leaving Las Vegaswas the right move for Camden, CEO says: "The decision to exitLas Vegas was a balance between losing a market with above-average NOI growth forthe near term versus the long-term challenges that Las Vegas faces," Chairmanand CEO Richard Campo said during an earnings call.

Market prices and indexvalues are current as of the time of publication and are subject to change.