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Marriott-Starwood tie-up wins shareholder nods; gaming REIT could gross over $1B in IPO


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Marriott-Starwood tie-up wins shareholder nods; gaming REIT could gross over $1B in IPO

The week ending April 8 saw Marriott and Starwood winning shareholderapprovals for their proposed combination and MGM Resorts' gaming REIT setting theprice range for its IPO. A hospitality REIT capping off its strategic review, anew player entering the North American real estate space and a wireless telecomgiant targeting more investments in India also led headlines during the week.

Vote of confidence

After nearlylosing out in a war with a group led by China's Anbang Insurance Group Co.,Marriott International Inc.'sproposed combination with StarwoodHotels & Resorts Worldwide Inc. moved one step closer to completionFriday after shareholders from both parties gave their go-ahead for the transaction.

In separate meetings, holders of more than 97% of Marriott sharespresent and voting, representing more than 79% of the company's outstanding shares,voted in favor of a proposal to issue shares of Marriott common stock in connectionwith the transaction, while holders of more than 95% of Starwood shares presentand voting, representing more than 63% of the company's outstanding shares, votedin favor of a proposal to approve the transaction.

At closing, Starwood stockholders will receive 0.8 shares ofMarriott's common stock and $21.00 in cash for each Starwood common share they own,as provided in the companies' amendeddeal. The companies are for a mid-2016 close.

Setting the price

MGM Resorts International'sREIT unit, MGM Growth Properties,has set the share countand price range for its proposed IPO.

The company disclosed Friday that it anticipates selling 50.0million class A common shares in the offering at a per-share range of $18 to $21,for potential gross proceeds of $1.12 billion at the midpoint of the range. It alsogranted the underwriters a 30-day overallotment option to buy up to an additional7.5 million shares. After the IPO, MGM Growth's voting common shares will be classifiedinto class A shares and a single class B common share, with the latter to be ownedby MGM Resorts.

MGM Growth will be just the second gaming REIT in the world, and its shares will be listedon the NYSE under the MGP ticker.

Strategic stop

Ashford HospitalityPrime Inc. announced this week that its strategic review process has been completed.

Deciding against an outright sale of the company, the hotel REITon Friday laid out five immediate structural changes and longer-term programs meantto enhance shareholder value. Among these are launching a program to buy back upto $50 million of stock, raising the quarterly cash dividend by 20% to 12 centsapiece starting with the second quarter and selling a maximum of four assets, whichmay possibly include the Courtyard Philadelphia Downtown Hotel, Courtyard SeattleDowntown Hotel, Renaissance Tampa Hotel and Marriott Legacy Center Hotel in Plano,Texas.

New kid on the block

A specialty finance platform, dubbed Peaceable Street Capital,was unveiled this weekby private investment outfit Orangewood Partners with the mission of investing insmall- and mid-scale income-producing real estate in North America.

The company will be led by former KimcoRealty Corp. Vice Chair and CEO David Henry, with former Kimco generalmanager of preferred equity investments Fred Kurz as CEO. Peaceable Street has alreadyclosed two transactions comprising preferred equity investments in the multifamilysector in January and in a self-storage portfolio in March.

In a statement Monday, Henry said that given the volatile CMBSmarket and regulatory roadblocks that have hampered traditional capital sources,"now is the optimal time for Peaceable Street Capital to build a diversifiedportfolio of high quality real estate investments, with a focus on current income,low credit risk and equity upside."

India investments

American TowerCorp. was reported this week to be planning to increase its investmentsin India, where it is in the process of acquiring a position in a local telecomtower operator.

The Boston-based wireless telecom REIT is reportedly lookingto pump $2 billion moreinto that country on top of an estimated 58.56 billion Indian rupees that it willinvest in exchange for a 51% controlling interest in Viom Networks Ltd.

American Tower is acquiringthe stake through its ATC Asia Pacific unit. The company's portfolio of about 14,000towers in India will be merged with Viom as part of the transaction. The stake acquisitionhas already obtained approval from India's Cabinet Committee On Economic Affairs,according to a Thursday report in the Press Trust of India.

Health hub

An IPO filing and a pair of large property transactions in thehealth care real estate space also led headlines this week.

* Maryland-based GlobalMedical REIT Inc. revealed plansto go public and to seek REIT status in an April 1 filing.

In particular, the company said it has filed for an IPO of anundisclosed number of its shares, with a $100 million proposed maximum aggregateoffering price, estimated solely for the purpose of calculating the registrationfee, and aims to qualify as a REIT, commencing with its taxable year ending Dec.31. It currently trades its stock on the OTC under the GMRE ticker but said thatit will apply to list on the NYSE under the GMR symbol.

The net proceeds from the IPO are expected to be contributedto Global Medical REIT LP in exchange for operating partnership units.

* National HealthInvestors Inc. announced Wednesday that Legend Healthcare, its existingtenant, opted to transition its current operations to a new operator. Accordingly,the REIT said it acquiredeight Legend-operated skilled nursing facilities comprising 931 beds in Texas for$118.5 million.

The Murfreesboro, Tenn.-based company also agreed to lease 15former Legend facilities to certain affiliates of The Ensign Group under a new 15-yearmaster lease. Two of the REIT's existing facilities with 245 beds in Texas willalso be sold to the Ensign affiliates for $24.6 million as part of the transaction.The health care REIT said it expects its net investment in the 15 facilities tocome to about $211 million as a result of the net acquisitions and dispositions.

* Physicians RealtyTrust announced Tuesday that it struck a $724.9 million deal to a portfolio of 52 medicaloffice facilities covering 3,159,495 rentable square feet across 10 states

The Milwaukee-based company is buying the assets from regionalhealth systems controlled by Catholic Health Initiatives and it has launched anupsized public offeringof 22.5 million common shares of beneficial interest to help finance the transaction.It expects to close the deal in two tranches, with the first tranche likely to closethis month and the second before the second quarter-end.

Parting ways

Howard Hughes Corp.CFO Andrew Richardson, who has beenwith the company for more than five years, is leaving to explore other opportunities and personal interests.

The Dallas-based company said Richardson's departure will takeplace later in 2016 and that he will assist in the immediate search for a new CFO.

Going to school

W. P. Carey adding a trio of "premium" private school assets in Florida to itsdiversified portfolio.

The New York-based company said Monday that it a private preparatory school campusin Windermere and is buying two more campuses in Coconut Creek from global premiumschool operator Nord Anglia Education Inc. under sale-and-leaseback transactionscollectively valued at about $167 million. The leases carry a 25-year term withannual uncapped CPI-indexed rent escalations. W.P. Carey expects to close on itspurchase of the two Coconut Creek assets by the end of the second quarter.

Done deals

A timber REIT and a regional mall REIT each announced the completionof their respective portfolio sales this week.

* WeyerhaeuserCo. said Monday that it has finalizedthe sale of an estimated 260,000 acres of southern U.S. timberlands to a formed by Plum CreekTimber Co. Inc. and several other institutional investors. The company pulled inroughly $440 million in cash from the sale of the timberland portfolio, which hadan estimated value of $560 million and was owned by Plum Creek before its with Weyerhaeuser.

Also, the joint venture obtained a final $150 million in institutionalfinancing from the Maine Public Employees Retirement System, bringing its totalcapital commitments to roughly $950 million.

* CBL & AssociatesProperties Inc. said Monday it closedthe sale of a retail center and a community center in two separate transactionsworth $151.5 million.

The Chattanooga, Tenn.-based company said the 363,176-square-footRenaissance Center retail property in Durham, N.C., was sold for $129.2 millionto InvenTrust Properties Corp.,while the 86,000-square-foot Crossings at Marshalls Creek community center in MiddleSmithfield, Pa., was sold for a net sales price of $22.3 million.

Now featured

Data Dispatch:Real estate companies' debt offerings grew, equity offerings fell YOY in Q1'16:While equity issuance was up from the fourth quarter of 2015, the total equity dealvolume fell far short of the year-ago quarter.

Data Dispatch:REIT M&A slows to a trickle, but Brookfield-Rouse deal may be catalyst:The first quarter saw only one REIT deal, but some have said Brookfield's play forRouse could be a harbinger for more consolidation in the B mall arena.

Data Dispatch:REIT ATM offerings up nearly 30% QOQ in Q4'15: Year-to-date in 2016,REITs have announced six new programs.

Data Dispatch:Sun Communities boosts California, Ontario exposure in Carefree Communities deal:Sun Communities' acquisition of Carefree Communities will also further solidifythe company's position in Florida, giving it an aggregate of 42,940 manufacturedhome and recreational vehicle sites.

Data Dispatch:62 North American real estate companies increase dividends YTD in 2016:Year-to-date through March 31, 62 North American real estate companies announceddividend increases, with Altisource Residential announcing the largest increaseduring the period.

Data Dispatch:With recent mall sales, PREIT looks to shed B mall standing: S&PGlobal Market Intelligence takes a look at the company's recent mall sales, thetail end of its yearslong portfolio repositioning.

Data Dispatch:US REITs swing to NAV premium in Q1: The office sector traded at thelargest discount to NAV at quarter-end, at 13.4%, while the self-storage sectortraded at the largest premium to NAV, at 39.4%.

Real Estate Rundown:'Buoyant' private RE fundraising cooling, but value-added strategies still attractive:Significantly fewer funds closed during the first quarter, but value-added strategieshad relative success, drawing 41% of the capital raised during the period, accordingto Preqin.

Real Estate Rundown:Expect multifamily vacancy to trend up, Reis says: The research firm'sfirst-quarter data showed moderate improvement in most office and retail fundamentals,but hinted at the prospect of a prolonged upswing in multifamily vacancy, as newconstruction outpaces absorption.

Real Estate Rundown:After Anbang-Starwood, timing of another China-US hotel deal is uncertain:A joint venture between Hersha Hospitality Trust and Cindat Capital Management,originally forecast to close by March 31, is now expected to be completed in thesecond quarter.

Anbang's abortedStarwood gambit raises questions about China-US deals: Large Chineseacquirers, including several insurance companies, are seeking to invest in U.S.assets. But observers say Anbang Insurance Group's ultimately unsuccessful bid toacquire Starwood Hotels & Resorts Worldwide illustrates the difficulties ofcross-border M&A.

Q&A: Value-addmall marketplace short on buyers, weak on financing, PREIT CEO says:S&P Global Market Intelligence caught up with Joseph Coradino after the company'slatest batch of mall sales to talk about the challenges of its ongoing portfoliorepositioning.

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