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Unibail-Rodamco to enter US market; Brookfield Property's GGP bid hits bump

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Unibail-Rodamco to enter US market; Brookfield Property's GGP bid hits bump

S&P Global Market Intelligence offers our top picks of U.S. real estate news stories and more published throughout the week. Please note that some entries may have links to third-party sources that may require a subscription.

Blazing the M&A trail

* Unibail-Rodamco SE is poised to take over Australian mall giant Westfield Corp. in a US$15.68 billion deal slated to close during the first half of 2018. The transaction would mark the European landlord's entry into the U.S. retail market, which recently has been characterized by falling rents and declining property values.

Although 75% of Westfield's assets are in the U.S., Unibail-Rodamco Chairman and CEO Christophe Cuvillier downplayed the significance of these regional malls in the portfolio and stressed that "Westfield is not a proxy" for the U.S. retail market.

* Brookfield Property Partners LP's initial bid to buy out GGP Inc. for $23 per share hit a roadblock after the latter reportedly rejected the offer. GGP's special board committee viewed the initial offer as inadequate, but the parties are continuing their negotiations, Reuters reported, citing unnamed sources.

* Iron Mountain Inc. struck a roughly $1.32 billion deal to acquire IO Data Centers LLC's operations in the U.S., which it will fund with proceeds from a $536.5 million common stock offering and an $825 million senior notes private placement. The transaction is scheduled for a January 2018 closing.

Road to REIT

* DDR Corp. is splitting off 38 of its continental U.S. assets and its entire 12-asset Puerto Rican portfolio, which had a combined gross book value of about $3 billion as of Sept. 30, into a publicly traded real estate investment trust that it will manage externally. The new REIT will be called Retail Value Trust, and the spinoff is expected to be completed in the summer of 2018.

* VICI Properties Inc., which recently spun off from Caesars Entertainment Corp.'s operating unit, registered an IPO with a proposed maximum offering price of $100.0 million and plans to seek REIT status starting with its 2017 taxable year. The company also upsized its private placement of common stock to $1 billion, with the goal of using the proceeds in part to help fund a $1.14 billion sale-leaseback deal.

Thought bubble

* After more than a decade of growth averaging almost 1 million new households per year, the number of new renters in the U.S. is set to remain flat or even decline in 2017, according to Harvard University's Joint Center for Housing Studies' latest national rental housing market report.

* The technology industry's appetite for office space in the U.S. remains strong, with 2017 tech leasing volume projected to surpass 2015 and 2016 levels, according to JLL's latest annual report that looked into some of the biggest trends affecting the real estate decisions of tech companies.

Cashing in

* Newmark Group Inc. downsized its IPO to 20.0 million class A common shares and set a price of $14.00 per share. At the midpoint of the projected range of $14.00 per share to $15.00 per share, the commercial real estate services firm estimated the net proceeds to come to about $268.1 million, excluding the underwriters' additional-share option.

* Simon Property Group Inc.'s operating partnership wrapped up a $1.35 billion debt offering, with part of the net proceeds going toward an optional redemption of $750 million of 1.50% notes due February 2018.

* Empire State Realty Trust Inc.'s operating partnership is poised to sell $450 million of senior unsecured notes in a private placement, with part of the net proceeds earmarked for certain mortgage debt repayment.

* Kilroy Realty Corp.'s operating partnership issued $425.0 million of 3.450% senior notes due 2024 in a just-completed public offering. Net proceeds will be used to redeem $325.0 million of 4.800% senior notes due 2018.

Special delivery

* KBS Strategic Opportunity REIT Inc. is funneling the proceeds from the recent sale of 11 of its properties to its shareholders in the form of a $3.61-per-share special dividend that it expects to pay in the middle of January 2018. The properties were sold to a newly listed Singapore real estate investment trust.

* Owing to gains on property sales, Weingarten Realty Investors and Piedmont Office Realty Trust Inc. are paying special cash dividends of 75 cents per common share and 50 cents per common share, respectively. Host Hotels & Resorts Inc. also expects to pay a special dividend of 5 cents per share Jan. 15, 2018.

Going, going, gone

* Equity Commonwealth reportedly is working out a more than $515 million deal to sell Groupon Inc.'s headquarters in Chicago. Sources told The Wall Street Journal that the company is in late-stage talks with prospective buyer Sterling Bay.

* Vornado Realty Trust reportedly is negotiating a deal to divest its stake in an Indian real estate joint venture to its partner The Chatterjee Group. A source told Livemint that the deal could be "worth several hundred million dollars" and is anticipated to be finalized soon.

* Carter Validus Mission Critical REIT Inc. closed on the sale of a data center covering about 250,000 square feet in the Chicago metropolitan area to an affiliate of Digital Realty Trust Inc.'s operating partnership. The property traded for $315.0 million.

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