REITs were down and the broader markets were up slightly Thursday,April 14, as Apple Hospitality REIT and Apple REIT Ten announced their plan to mergein a cash-and-stock deal with a $1.3 billion implied value.
The MSCI US REIT Index (RMZ) dropped 0.58% to 1,143.79, and theSNL US REIT Equity Index fell 0.58% to finish at 305.34. The Dow Jones IndustrialAverage picked up 0.10% to close at 17,926.43, while the S&P 500 rose 0.02%to end the day at 2,082.78.
Apple HospitalityREIT Inc. has struck a $1.3 billion deal to take over AppleREIT Ten Inc., a move that the company said will form one of the largestselect-service lodging REITs, with a portfolio of 234 hotels across 33 states andan enterprise value of roughly $5.7 billion.
The companies said April 14 that the cash-and-stock deal hasbeen approved by their respective boards and should be finalized during the thirdquarter, subject to shareholder and other approvals.
In a release, Apple Hospitality President and CEO Justin Knightsaid the transaction "further strengthens our presence in key markets and expandsour geographic footprint to include locations in 94 MSAs throughout 33 states."
Apple Hospitality shares ticked up 0.16% to $19.26 on April 14.
In capital offerings, PublicStorage on April 14 disclosed a privateplacement of 1.54% senior unsecured notes with an aggregate principalamount of €100 million.
The euro-denominated notes are due April 12, 2024. Proceeds fromthe sale of the notes will go toward general corporate purposes, the self-storagegiant said in a filing.
Public Storage shares dropped 1.75% on Thursday to $267.15.
Fibra UNOsaid April 12 that it issued4.50 billion Mexican pesos worth of unsecured bonds in a three-tranche placementin the Mexican market.
The company said it will use the proceeds to refinance existingdebt without adding to its current debt level, after completing all payments.
Fibra UNO shares gained 1.08% on Thursday to 40.39 Mexican pesos.
CorEnergy InfrastructureTrust Inc. said April 14 that Energy XXI GIGS Services LLC has not filedfor bankruptcy and that its obligations as tenant under the Grand Isle GatheringSystem lease are not subject to the Chapter 11 proceedings affecting Energy XXILtd.
The statement is inresponse to an announcement that Energy XXI, which is the guarantorof the Grand Isle lease, filed a voluntary petition to reorganize under Chapter11 of the U.S. Bankruptcy Code.
"As long as our tenant remains in compliance with our lease,including the timely payment of rent, we intend for GIGS Services to maintain itsoperations of our asset," CorEnergy CEO Dave Schulte said in a release.
CorEnergy shares plummeted 9.26% on April 14 to $19.99.
In property news, KBSReal Estate Investment Trust Inc. said April 14 that Pontus Net LeaseAdvisors LLC has acquired 61 of its bank branch properties for $139.6 million, netof closing credits.
The properties, which comprise 245,843 rentable square feet,have a carrying value of about $105.7 million. The company realized an estimated$30.0 million gain on the saleof the assets, after fees and expenses.
On the macro lodging front, STR Inc. reported April 14 that hotelsin the U.S. notched year-over-yeargains in two of three key performance metrics in the week ended April 9. Specifically,RevPAR rose 3.9% to close at $83.83 and ADR climbed 3.9% to finish the week at $122.90.Occupancy, meanwhile, stayed flat at 68.2% during the week.
Data Dispatch:Small-cap REITs forecast to have high FFO growth potential, despite underperformance:Large-cap REITs have outperformed small-cap REITs in recent total return, price-to-NAVand price-to-FFO, yet median Cap IQ estimates show small-cap REITs with nearly 3xthe forecast FFO growth for 2016.
Conference Chatter:Zell, GGP's Mathrani predict recession, but the upshot for real estate is unclear:In appearances at New York University's annual REIT symposium, both executives arguedthat a coming downturn would be mild compared to the last recession. Other executiveswere split on the effect the broader economy would have on real estate.
Conference Chatter:With so many REITs trading at discounts, where is the M&A?: At anNYU-sponsored conference, industry observers debated the rationale for scale andoffered M&A projections for 2016.
Shared leadershipis a boon in Apple REIT Ten acquisition, Apple Hospitality execs say:The executives discussed the roughly $1.3 billion deal in an April 14 conferencecall.
Market prices and indexvalues are current as of the time of publication and are subject to change.