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Simon Property ventures into healthcare; AvalonBay plants flag in Sunshine State

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.

Expanding the multifamily

* Multifamily vacancy in the U.S. ticked up to 4.5% in the fourth quarter from 4.4% in the prior quarter, as excess supply dragged on the market, according to the latest quarterly data from Reis Inc. Vacancy ticked up in 50 of the 79 tracked metropolitan areas during the period.

Asking rents meanwhile ticked up 0.4% and effective rents rose 0.3%. The average quarterly growth rates for the metrics are 0.9% and 0.8%, respectively.

"These growth rates reflect a deceleration in apartment market fundamentals compared to recent years, due in part to the large amount of new supply coming online," Victor Calanog, Reis' chief economist, said of the rent metrics.

Reis noted that 213,802 multifamily units came online in 2017, the first year since 1986 that more than 200,000 apartment units were delivered in a single year.

* Multifamily real estate investment trust AvalonBay Communities Inc. entered the Florida market with a $138 million apartment complex purchase in Boca Raton, in the Park at Broken Sound mixed-use community, The Real Deal reported Dec. 27. The complex comprises 336 apartments, 34 townhomes and amenities and was 69% occupied as of October.

New alliances

* Welltower Inc. and Simon Property Group Inc. entered into a joint venture to bring a 105,000-square-foot cancer-focused outpatient center to The Shops at Mission Viejo, a Simon Property Group asset, in California. The venture marks the first such collaboration between Simon Property and a healthcare REIT.

* With an initial cash investment of C$45 million, Summit Industrial Income REIT entered into a joint-venture partnership with Urbacon Ltd, a construction and engineering firm, to develop and own data centers across Canada, including Urbacon's Data Centre One property in the Barker Business Park Digital Campus in Richmond Hill, Ontario.

* As part of a joint venture with Madison International Realty, Forest City Realty Trust Inc. converted its common ownership stake in 10 specialty retail centers in the New York City metro area to preferred interest. Completion of the conversions of Forest City's common interest in two other centers is expected by the end of the 2018 first quarter.

The overall deal values the 12 centers at roughly $450 million at Forest City's 51% share and reflects an approximate 5% cap rate on 2016 net operating income.

The rent is too high

* Quality Care Properties Inc.'s primary tenant, HCR III Healthcare LLC, will pay reduced monthly rent in the amount of $23.5 million for a one-year period beginning Nov. 30, based on a new agreement between the entities.

However, HCR III's parent, HCR ManorCare Inc., expects it will be unable to pay a material portion of the reduced rent during some or all of the period, with its operating results anticipated to "continue to trend significantly downward in 2018," Quality Care said in a release.

Deal reel

* ARC Healthcare Trust III Inc. closed the sale of substantially all of its assets to Healthcare Trust Inc. and declared an initial liquidating distribution of $15.75 per common share, to be paid on or about Jan. 5, 2018, to stockholders of record at the close of business Dec. 22.

* In California, CIM Group L.P. is set to purchase from Beverly Union Co. the six-story, 91%-occupied Union Bank of California building in Beverly Hills for about $130 million, or $1,340 per square foot, The Real Deal reported Dec. 26.

There were reportedly more than 30 contenders for the property, which came to market in October. The deal is expected to close in January 2018.

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