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Starwood-Marriott tie-up gets back on track as Anbang exits; Iron Mountain-Recall deal advances

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Starwood-Marriott tie-up gets back on track as Anbang exits; Iron Mountain-Recall deal advances

The U.S. real estate space closed out the week with a bang, asChinese insurer Anbang made a surprise disclosure that it is backing out of itsplay for Starwood Hotels, clearing the way for Marriott to proceed with its tie-upwith the hotel company. Iron Mountain winning regulatory approvals for its Australianpeer acquisition and Inland Real Estate closing its go-private deal also led headlinesduring the week ending April 1.

Ending HOT pursuit

In a sudden turn of events, the consortium that sought to takeover Starwood Hotels & ResortsWorldwide Inc. announced this week that it has decided to abandon itsbid for the hotel company,ending a series of competing offers that nearlyderailed Marriott InternationalInc.'s play.

China's Anbang Insurance Group Co., J.C. Flowers & Co. LLCand Primavera Capital Ltd said Thursday that their decision was "various market considerations."The group's surprise withdrawalcame just days after it againincreased its cash offer for Starwood to $82.75 per share from $78 per share, evenafter reports emergedthat Chinese regulators had a "disapproving attitude" toward the company'sproposed acquisitions outside of China.

In separate statements late Thursday, Marriott and Starwood their commitment to and form what they said willbe the largest hotel chain worldwide.

"Throughout this process, we have been focused on maximizingstockholder value now and in the future," Starwood Chairman Bruce Duncan saidin a release. "Our board is confident this transaction offers superior valuefor Starwood's stockholders, can close quickly, and provides value-creation potentialthat will enable both sets of stockholders to benefit from future financial performance."

Marriott President and CEO Arne Sorenson said in a conferencecall Friday that his company is "absolutely thrilled" with the Starwood deal being back on the table,calling such a combination "extraordinarily powerful."

Marriott, as disclosed earlier, increased its cash-and-stock offer for Starwood to $13.6billion, or $79.53 per share. The amended merger deal would see Marriott paying $21.00 in cash and 0.80 shareof its class A common stock to Starwood shareholders for each share they own. Thecompanies, targeting for a mid-2016 close, called on their respective stockholdersto vote in favor of the transaction at separate meetings scheduled for April 8.

Getting there

Iron Mountain Inc.this week advanced its pendingacquisition of Australianpeer Recall Holdings Ltd. with a pair of regulatory wins.

The Boston-based records-management giant said Wednesday thatthe Australian Competition and Consumer Commission approved its planto unload its Australian business in a stock sale. It added that the U.K.'s Competitionand Markets Authority gave the go-ahead for its request for "hold separate"consent regarding the Recall deal.

In the U.S. and Canada, however, Iron Mountain and Recall willneed to meet certain requirements to be granted antitrust approvals. It was disclosedThursday that the U.S. Department of Justice is requiring the parties to 15 of their U.S. propertiesin certain metropolitan areas. Iron Mountain also reportedly agreed to shed itsrecords-management facilities and customer contracts in six major Canadian citiesin order to address competition concerns by Canadian regulators.

The REIT expressed confidence that its Recall acquisition remainson schedule to be finalized May 2, Sydney time, after which it will transfer Australianoperations that are not part of the proposed stock sale to the combined Australianentity.

Done deal

A week after its stockholders gave the green light to its go-private deal with certain funds managed by DRA AdvisorsLLC, Inland Real Estate Corp.announced Wednesday that the roughly $2.3 billion transaction had been finalized.

As provided in the merger deal, Inland stockholders were entitledto receive $10.60 in cash, without interest and less any applicable withholdingtaxes, for each share they own.

The newly private shopping center REIT said it will operate underthe name IRC Retail Centers Inc.

A change of pace

Gaming and LeisureProperties Inc. announced Monday that it amended its merger dealwith Pinnacle Entertainment Inc.

The all-stock deal, which has an implied enterprise value of$4.75 billion, provides that Pinnacle's operating unit and the real property ofBelterra Park Gaming & Entertainment Center will be spun off into a separatelytraded public company, with Pinnacle's remaining real estate assets to be acquiredby Gaming and Leisure.

The amendment, among other changes, pushed back for a month thedate after which either party may opt to terminate the merger transaction if ithas not yet been closed, subject to certain exceptions. The date has now been setat April 30, compared to the previous date of from March 31.

Separately, Pinnacle agreed to pay $138.0 million to the operations of the MeadowsRacetrack and Casino in Washington, Pa., from Gaming and Leisure.

The property's gaming business will be operated by Pinnacle,and its underlying real estate will be leased from Gaming and Leisure after thedeal's completion. Gaming and Leisure is currently under contract to the casino from CanneryCasino Resorts LLC in a $440 million transaction.

Strategic sales

A trio of REITs each announced asset sales this week as theypursue their respective strategic efforts.

* Gramercy PropertyTrust Inc. announced Wednesday that it divested a four-building office campus, dubbed Pacific CorporatePark, in Sterling, Va. The transaction, which had a gross sale price of $145.5 million,pulled in net proceeds of $142.1 million.

The New York-based diversified REIT said the transaction is partof its plan to dispose of certain of its single- and multitenant office assets.

* Consistent with its ongoing effort to reposition its portfolio, Pennsylvania Real Estate Investment Trust disclosed Wednesdaythat it finalized thesale of a portfolio of four noncore malls across three states in two separate transactions.

The regional mall REIT said Wednesday that the Lycoming Mallin Pennsdale, Pa., sold for about $26.4 million, while the Gadsden Mall in Gadsden,Ala.; New River Valley Mall in Christiansburg, Va.; and Wiregrass Commons Mall inDothan, Ala., were sold in a packagedeal worth $66 million.

* First PotomacRealty Trust said Monday that it closed on the sale of eight of its noncore assets in NorthernVirginia, advancing its strategyof divesting $350 million of properties and strengthening its balance sheet.

The office REIT noted that the transaction netted $90.5 millionand that it plans to use the proceeds to redeem a portion of its remaining 7.75%series A preferred shares.

Changing lanes

A health care REIT is parting company with its CFO, while a hotelREIT is bringing in a new money man.

* HCP Inc.announced Monday that Timothy Schoen is steppingdown as its executive vice president and CFO.

To help find a successor, the Irvine, Calif.-based company saidit has enlisted the help of global executive search firm Spencer Stuart. Schoenwill become president of BioMed Realty Trust Inc., which was recently by private equity giantBlackstone Group LP.

* Xenia Hotels& Resorts Inc. said Tuesday that Hyatt Hotels Corp.'s formerinterim is poised to join its senior managementteam.

The Orlando, Fla.-based hotel REIT tapped Atish Shah to succeed Andrew Welch as its executivevice president, CFO and treasurer. Welch had left the company to pursue other business opportunities.Shah will also assume Joseph Johnson's position as principal financial officer.Johnson will remain with Xenia as senior vice president and chief accounting officer,as well as its principal accounting officer.

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Data Dispatch:March state of the housing market: Data released in March showed a generallypositive picture of conditions in the U.S. housing market.

Real Estate Rundown:Anbang renews long Starwood courtship — but is the insurer's offer high enough?:Anbang Insurance Group Co. may be leading in the bidding to acquire Starwood Hotels& Resorts Worldwide, but a recent filing indicates the insurer made even higherbids for the company in late 2015.

Real Estate Rundown:Lessons to be learned from J.C. Penney's bounce back: The departmentstore lost roughly 20 million customers when it implemented radical changes in 2012,but it has clawed its way back by restoring and expanding its product mix and implementingnew strategies to target millennial tastes.

Anbang a 'veryformidable and incredible counterparty,' Starwood CEO says: StarwoodHotels CEO Tom Mangas said on a conference call that the company was "disappointed"it could not proceed with the Anbang consortium's takeover proposal, but ralliedbehind Marriott International's takeover offer as the best deal for shareholders.

Marriott's Sorenson:'We have zero buyer's remorse': On a conference call, the executiveseemed relieved that the Marriott-Starwood combination was back on track and projecteda mid-2016 close.

The Cash-Out: SuperBowl, leap year boost February gaming revenues on Las Vegas Strip: Statewidegaming revenues in Nevada were also up, by 8.05%.

Recurring reports

Best of SNL: Real Estate, most read; Real Estate, editors' picks

The Property Ledger: Terrenopicks up NJ land parcel; Slate Retail to reinvest Ala. property sale proceeds,Steadfast Apartment makes 6th Colo.asset buy; Rexford snags 2 Calif. industrial facilities

Hires and Fires: RealEstate moves through March 30, North America edition

The Short Report: USREITs see decline in short interest in March 1st half; ; US gaming shortinterest slips in March 1st half