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Unibail-Westfield deal causing US M&A buzz; Blackstone buys $325M apartments

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Unibail-Westfield deal causing US M&A buzz; Blackstone buys $325M apartments

Commercial real estate

* The $15.68 billion bid by Europe's largest real estate investment trust, Unibail-Rodamco SE, for global mall giant Westfield Corp. "has the market buzzing" about the possibility that Simon Property Group Inc. could make a play for a rival REIT, according to The Real Deal.

According to the report, Unibail's deal could also have consequences for Brookfield Property Partners LP's intended acquisition of GGP Inc. The target company recently rejected an offer but said it is still in talks. Brookfield is expected to return with a higher offer.

The report also pointed out that Simon holds a 28.7% stake in Klépierre, Europe's second-largest mall operator, which is said to be a potential bidder for U.K.-based REIT Hammerson Plc. According to experts, Simon could potentially make a move through Klépierre to reject Hammerson's recent acquisition offer for peer Intu Properties Plc, the report added.

* Blackstone Group LP acquired three apartment buildings in South Lake Union, Seattle, for a sum of $325 million, the Puget Sound Business Journal reported, citing public records.

According to the deeds, Japan-based Sekisui House Ltd.'s North America Sekisui House subsidiary sold its interest in the properties to Blackstone, with the developer Holland Partner Group retaining its ownership stake in the assets, the report noted.

The three complexes — One Lakefront, Westlake Steps and Marina SLU — comprise a total of 730 apartment units. One Lakefront was bought for $155 million, while Westlake Steps and Marina SLU were purchased for a total price of $170 million, according to the report.

* Goldman Sachs Group Inc. is under contract to acquire the Fifth Third Center for $120 million in one of the highest prices ever paid for a downtown Nashville, Tenn., office tower, the Nashville Business Journal reported, citing unnamed real estate sources with knowledge of the deal. The 491,500-square-foot, 31-story property is downtown Nashville's fifth-largest office building and is 85% leased, according to the report.

Tenants include Fifth Third Bank, Sony/ATV Music Publishing, law firm Adams & Reese and Loews Hotels.

* Choice Hotels International Inc. entered into an agreement with Stratus Development Partners LLC to build a new Cambria hotel in downtown Orlando, Fla., at 170 E. Washington St., Citybizlist reported. The eight-story, 153-room Cambria Hotel Orlando is slated for a 2020 opening.

* DivcoWest and Rockpoint Group closed the acquisition of downtown San Jose, Calif.'s Riverpark Towers for $283.5 million, the Silicon Valley Business Journal reported, citing county records. The two nearly identical buildings were constructed roughly two decades apart.

The 16-story, 302,576-square-foot 300 Park Ave. building, which is the newer of the two towers, sold for roughly $164.7 million, or $544.31 per square foot, marking a record per-square-foot price for downtown San Jose, the report noted.

The 1987-built tower at 333 W. San Carlos St., spanning 300,224 square feet, sold for roughly $118.8 million, or $395.57 per square foot.

* Women's apparel retail chain Ann Taylor intends to shut down its location in Boston Properties Inc.'s Reston Town Center in Reston, Va., Dec. 23, Reston Now reported, citing an email from the tenant. The report noted that reasons for the closure are unclear and the company did not respond to requests for comment.

According to the report, a Boston Properties spokesperson said the store's lease is set to expire Dec. 31, adding that the landlord does not comment on current leases and will announce a future tenant when more information is available.

* The Wall Street Journal featured a report on co-working space provider WeWork Cos.' recent change in attitude toward its competitors. WeWork executives have previously downplayed competitive threats, maintaining that similar companies would help the sector's growth.

Now, co-working companies around the world say that WeWork ran a campaign in the fall offering a rent-free year to tenants who sign a two-year contract in a bid to poach competitors' clients. WeWork says it has since ended the campaign, according to the publication.

WeWork has also been critical of a number of its landlords who signed deals with its competitors. The report noted, citing people familiar with the matter, that WeWork chief executive Adam Neuman contacted Blackstone real estate chief Jon Gray to "express his displeasure" after Blackstone acquired a majority stake in a London-focused co-working company in June.

* Stiles Corp. and PGIM Real Estate landed a $100 million financing package from Wells Fargo to start development at their Residences of Las Olas apartment tower in downtown Fort Lauderdale, Fla., The Real Deal reported. The 42-story project at 215 N. New River Drive East will have 419 units plus ground-floor retail space and amenities.

* New York Gov. Andrew Cuomo unveiled a $1 billion plan that involves building an 18,000-seat stadium and a 435,000-square-foot retail development along with office and public green space in Nassau County to bring the New York Islanders ice hockey team back to the county, the Wall Street Journal reported. The team moved to Barclays Center in Brooklyn, N.Y., in 2015.

The project will be privately funded by a conglomerate of companies that have been awarded the land by the state. The companies include Madison Square Garden and Sterling Project Development, the report noted.

After the bell

* A Blackstone Real Estate Income Trust Inc. subsidiary agreed to acquire a 146-property, roughly 21.7 million-square-foot industrial portfolio for about $1.8 billion.

* Boyd Gaming Corp. agreed to pay $280.5 million in cash to acquire Valley Forge Casino Resort in King of Prussia, Pa., from Valley Forge Convention Center Partners LP.

* Commercial real estate investments in Canada are expected to reach about C$31.94 billion in 2017, marking the third-best year in the country's history, according to the latest report from CBRE Ltd.

Housing

* Citing Zillow, the Wall Street Journal reported that at least 23 million fewer U.S. homeowners will be incentivized to buy a home under the Republican tax code overhaul, which almost doubles the standard deductions for individual and joint tax filers. The overhaul deals a blow to the mortgage-interest deduction, which has been an important factor in homebuying decisions, especially in higher-priced markets.

The legislation also limits the deduction for state and local taxes at $10,000, which would adversely affect homeowners in high-tax states. The publication noted that the changes, when considered together, "significantly diminish the perks of homeownership built into the tax code."

Citing a Moody's Analytics analysis, the Journal pointed out that U.S. home prices are expected to be roughly 4% lower in summer 2019 than if there were no tax changes, while prices in more expensive markets like New Jersey and New York could be up to 10% lower.

On the same topic, Bloomberg News reported, citing Miller Samuel Inc. President Jonathan Miller, that there will be a downward pressure on prices in expensive New York markets like Westchester County and Manhattan.

The day ahead

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

In Asia, the Hang Seng rose 0.45% to 29,367.06, and the Nikkei 225 was down 0.11% at 22,866.10.

In Europe, as of midday, the FTSE 100 was up 0.37% at 7,553.33, and the Euronext 100 had fallen 0.03% to 1,038.96.

On the macro front

The GDP report, the jobless claims report, the Chicago Fed national activity index, the FHFA house price index, the leading indicators, the EIA natural gas report, the Fed balance sheet and the money supply report are due out today.

The Daily Dose is updated as of 7:30 a.m. ET. Some external links may require a subscription. Articles and links are correct as of publication time.