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Brookfield-GGP deal gets negative reactions; Honolulu project up for sale


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Brookfield-GGP deal gets negative reactions; Honolulu project up for sale

Commercial real estate

* Bloomberg News reported that Wall Street analysts' initial conclusions regarding Brookfield Property Partners LP's agreement to take over GGP Inc. are mostly negative, with BTIG LLC's James Sullivan and Ami Probandt deeming the offer "wholly inadequate." The BTIG analysts estimate the value of the new offer at $21.90 per share, compared to estimates of between $28.06 and $32.93 per share for the net asset value of GGP's holdings.

Green Street Advisors LLC expects GGP shareholders to accept the offer despite the disappointing price, Bloomberg News noted.

The Wall Street Journal also reported on analyst reactions and noted that the low bid roiled the market due to the fact that GGP's portfolio includes some of the top malls in the U.S.

* Salem Partners has placed its 1500 Kapiolani hotel-condominium project in Honolulu up for sale, Pacific Business News reported. The property, located behind Ala Moana Center, does not have an asking price.

The seller has approval in place for two 400-foot tall towers comprising 450 units in the $550 million project, the report noted.

* The Long View column of The Real Deal featured a look at an expected surge in property acquisitions by large U.S. corporations in light of Google Inc.'s recent $2.4 billion purchase and JPMorgan Chase & Co.'s plan to build a new headquarters, both in Manhattan, N.Y. The report noted a number of factors in favor of such deals, including corporations' record level of cash reserves, new tax reform that allows firms to repatriate their offshore wealth at a lower tax rate for a limited period, and changes in accounting rules.

The report added, citing PricewaterhouseCoopers LLP's Byron Carlock, that companies are also paying closer attention to their office space as they face pressure to attract workers through the right work environment.

* Stanford Hotels paid $128 million for a controlling interest in the 4.6-acre, four-skyscraper Elev8 project in Bellevue, Wash., the Puget Sound Business Journal reported, citing public records. The interest was sold by Plus Investment (USA) Inc., an affiliate of a Chinese company.

The project would have two 40-story residential towers in its $600 million first phase, with the second phase set to include a residential tower and a 350-foot tall office building. Plus was expected to break ground on the first phase earlier in 2018 but was awaiting financing, according to the report.

The report also noted, citing Stanford Hotels, that the buyer is evaluating all options for the project in light of the city's new zoning rules that allow for up to 600-foot tall towers.

* The first-quarter apartment vacancy rate in the U.S. was 4.7%, up from 4.6% in the fourth quarter of 2017 and 4.3% in the year-ago period, the Journal reported, citing Reis Inc. The average apartment rent increased 3.9% year over year.

The publication noted that an expected sharp slowdown in occupancy and rent growth has not been observed despite a flood of new supply.

* Publicly listed real estate investment trusts have made $6.91 billion worth of disposals and $5.38 billion of acquisitions from January to March 23, the Journal reported, citing data from Real Capital Analytics. The publication noted that REITs have been net sellers since 2015.

The sales have been due to a widening gap between the REITs' discounted share prices and the value of private-market transactions of physical assets, and the sales are attempts to raise cash to help reposition remaining assets or fund share repurchases, according to the report. Citing industry insiders, the Journal noted that the sales are not spurred by a need to reduce debt as REITs have been more disciplined since the financial crisis.

* Financial services company John Hancock plans to move its headquarters from Boston's Seaport District to Back Bay by the end of 2018, and would look to sell or lease its tower in Seaport, the Boston Business Journal reported. The 601 Congress St. tower spans 465,000 square feet and presently accommodates roughly 1,100 John Hancock employees.

The company's Back Bay campus spans 1.19 million square feet, the report said, adding that the company also has approval to develop a 26-story tower at 380 Stuart St., also in the Back Bay. Company spokeswoman Anne McNally said the company is still deciding whether to develop the tower for itself or to lease to another tenant, according to the report.

* A 2.52-acre development site in downtown Miami is on the market for $125 million, The Real Deal reported, citing Devlin Marinoff, Tony Arellano and Skyler Marinoff of Dwntwn Realty Advisors, who are marketing the property.

The report noted that the site is being marketed as Flagler City Center, with up to four million square feet of development potential containing 2,500 residential units. The site is also approved by the Federal Aviation Administration for a 1,010-foot tall tower, according to the report.

* Angus McCarthy acquired the Lion Building in San Francisco's Mission district for just under $70 million, the San Francisco Business Times reported, citing sources familiar with the deal. The office and light industrial property at 2525 16th St. spans 150,000 square feet.

An adjacent 20,000-square-foot parking lot that is zoned for commercial development or up to 110 homes is still up for sale, the report noted.

* Canada-based RISE Properties Trust partnered with Boston-based Intercontinental Real Estate Corp. to acquire the 239-unit West Ridge Park apartment complex in West Seattle for roughly $72.5 million, the Puget Sound Business Journal reported, citing public records. The asset was sold by Grosvenor USA Ltd.

RISE now owns 11 apartment properties in the Greater Seattle area, the report noted.

* The $83 million sale of the former Parkland Memorial Hospital campus was approved by Dallas County commissioners, the Dallas Business Journal reported. Developer Sam Ware of Dreien Opportunity Partners LLC is buying the 38.3-acre property to convert it into offices, shops, hotel rooms and apartments.

The project, called The District, is being developed by Ware and Jeff Blakely.

After the bell

* GGP disclosed certain no-shop and termination fee provisions in its merger deal with Goldfinch Merger Sub Corp., a unit of Brookfield Property Partners LP.


* Lennar Corp., through its Eagle Home Mortgage subsidiary, is attempting to attract millennials by using mortgage-application technology that allows customers to apply for a mortgage online or on their phone, the Journal reported. The technology is being provided by startup Blend.

Citing executives, the publication noted that the technology could cut up to 10 days from the mortgage application process.

The day ahead

Early morning futures indicators pointed to a mixed opening for the U.S. market.

In Asia, the Hang Seng was down 2.34% at 30,070.29, while the Nikkei 225 was down 1.34% at 21,031.31.

In Europe, as of midday, the FTSE 100 was down 0.17% at 6,987.95 and the Euronext 100 had fallen 0.68% to 995.15.

On the macro front

The Bank Reserve Settlement report, the MBA mortgage applications report, the GDP report, the international trade in goods report, the pending home sales index, the EIA petroleum status report and the Farm prices report are due out today.

Now featured on S&P Global Market Intelligence

Tepid reception to Brookfield-GGP deal pricing: Analysts deemed Brookfield Property's proposed takeover price low and weighed the possibility that GGP shareholders would reject it, as mall REIT stocks traded lower.

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