REITs lost ground and the broader markets edged higher Wednesday,April 27, as Federal Reserve policymakers opted to leave the key federal funds rateunchanged at the end oftheir April meeting.
The MSCI US REIT Index (RMZ) dipped 0.19% to 1,142.88, and theSNL US REIT Equity Index slid 0.17% to finish at 305.30. The Dow Jones IndustrialAverage added 0.28% to close at 18,041.55, while the S&P 500 gained 0.166% toend the day at 2,095.15.
Boston PropertiesInc. executives revealed on an earnings call that the company a 218,000-square-foot officebuilding at 3625-35 Peterson Way in Santa Clara, Calif., in a strategic deal valuedat $78.0 million.
CEO Owen Thomas said during the call that the company plans toentitle the asset, which is leased to a single tenant through 2021, for a roughly630,000-square-foot office campus during the remaining lease term.
"The Peterson Way site offers an opportunity for us to deliverproduct in 2023 at a cost basis of under $700 a square foot — and that assumes costescalation on the cost side of the equation in terms of our building materials,labor, etc. — and an initial return in excess of 7% at rents that are less than10% above market rents today," said President Douglas Linde, who noted thatthe Silicon Valley market is one that the company "definitely wants to be apart of," given the area's favorable leasing and user activity.
The executives also discussed other recent transactions duringthe call, including the February completion of the $105.4 million of 415 Main St. in Cambridge, Mass., to MIT.
In reporting year-over-year gains in FFO during the first quarter,Boston Properties updatedits full-year guidance and issued its estimates for the second quarter.
Shares of Boston Properties inched up 0.04% to $130.60 on April27.
In other property news, Mack-CaliRealty Corp. announced that it agreed to buy Equity Commonwealth'sleasehold interest in a 566,215-square-foot office asset at 111 River St. in Hoboken,N.J., in a $235 million deal set to close in June.
The transaction, which marks Mack-Cali's first in Hoboken, willbring the company's share of the Hudson River Waterfront class A office market toabout 25%.
In addition, Mack-Cali is buying an office building at 101 WoodAve. South in Metropark in Edison, N.J., in an $82.3 million transaction expectedto be completed in May and completed the purchase of three smaller assets for anestimated $34 million. The company also announced two property sales in Washington,D.C., and downtown Manhattan, N.Y., which were respectively worth $93 million and$202 million, among other transactions.
Mack-Cali shares added 0.73% to $24.97 on Wednesday, while EquityCommonwealth shares jumped 3.18% to $28.52.
Meanwhile, CamdenProperty Trust unloaded15 communities comprising 4,918 apartment homes, a retail center and approximately19.6 acres of undeveloped land in Las Vegas.
The company said the $630 million portfolio sale is part of itscapital-recycling efforts.
Camden shares dipped 0.73% to $82.04 on Wednesday.
In executive moves, HiltonWorldwide Holdings Inc. tappedRLJ Lodging Trust co-founderThomas Baltimore Jr. to serve as president and CEO of its proposed hotel REIT.
Hilton also named Sean Dell'Orto to be the CFO of its proposedREIT, slated to be formed later in 2016, while continuing to serve in his rolesas senior vice president and treasurer of the company.
Baltimore, whose appointment at Hilton will become effectiveMay 16, accordingly resigned as president and CEO of RLJ Lodging. RLJ Lodging, inturn, appointed current Executive Vice President and Chief Investment Officer RossBierkan to be its interim CEO.
Hilton shares packed on 2.96% on April 27 to finish at $22.28,while RLJ Lodging shares fell 0.50% to $22.08.
Similarly, BrixmorProperty Group Inc. is giving the CFO post to Angela Aman, who mostrecently served as executive vice president, CFO and treasurer at
Aman will takeover the role from Barry Lefkowitz, who has been as Brixmor's interim CFO sincean accounting scandalcame to light in February. Aman's appointment will take effect May 20.
The company also affirmed its 2016 NAREIT FFO guidance whilereporting its first-quarter earnings.
Brixmor shares added 0.62% on Wednesday to $25.91.
In earnings, PublicStorage and Realty IncomeCorp. both posted respective annual gains in FFO per share and AFFOper share, while EquityResidential recorded a year-over-year drop in normalized FFO per share.
Public Storage also noted that its board raised the regular commonquarterly dividend to $1.80 per common share, up 5.9% over the prior quarter's distribution.Realty Income maintainedits full-year earnings guidance, while Equity Residential tightened its normalizedFFO outlook for the full year and provided second-quarter projections.
Public Storage shares plunged 3.35% to $248.21 on April 27, RealtyIncome shares slid 0.25% to $59.45 and Equity Residential shares dropped 2.52% to$68.75
In shareholder activism, Land & Buildings Investment ManagementLLC's Jonathan Litt took aimat Investors Real Estate Trust,pointing to "substantial downside" to the company's shares.
The activist investor said in a release that the company is "saddledwith an overleveraged balance sheet and has seen a dramatic downturn in severalof its markets following the collapse in oil prices."
Investors Real Estate shares plummeted 13.41% to $6.07 on April27.
On the macro front, the Mortgage Bankers Association reportedthat U.S. mortgage applications in the week ended April 22 dropped 4.1% week over week on a seasonally adjusted basis.
The National Association of Realtors, meanwhile, reported thatU.S. pending homes sales in March hit a reading of 110.5 on its pending home salesindex, up 1.4% month overmonth from a downwardly revised 109.0 in February.
Self-storage propertymarkets are unappealing, but Public Storage has found deals anyway, CEO says: In an earnings conference call, Chairman, Presidentand CEO Ronald Havner Jr. said that despite more product, lower quality and higherprices in the market for storage properties than in 2015, Public Storage has foundassets to buy.
Realty Income CEOaddresses tenant watch list: On an earnings call, CEO John Case brieflyaddressed the expected impact of Sports Authority's planned liquidation.
Despite revenuepullback and choppy NYC, Equity Residential expects strong 2016: Evenif 2016 does not turn out to be as "spectacular" as 2015 was, it is stillon track to be a "great" year, an executive said in an earnings conferencecall.
Brixmor exec talksSports Authority liquidation, new C-suite hires: On an earnings call,Interim President and CEO Daniel Hurwitz doffed his hat to Federal Realty's DonaldWood for the way he handled Brixmor's hiring of his CFO.
Hilton CEO predictsmore M&A, outlines 2016 optimism: On an earnings conference call,President and CEO Christopher Nassetta also weighed in on the planned combinationof Marriott International and Starwood Hotels and Resorts Worldwide.
Hilton CEO laudsREIT spinoff's exec team, but details remain sparse: In an earningsconference call, Hilton President and CEO Christopher Nassetta complimented ThomasBaltimore Jr., the intended CEO of the company's planned spinoff, and said moreinformation on the spinoff will come soon.
Data Dispatch:April state of the housing market: Data released in April showed a generallypositive picture of conditions in the U.S. housing market.
Data Dispatch:US equity REITs' capital raising activity down 27.8% YOY: Year-to-datethrough April 15, publicly traded U.S. equity REITs have favored senior debt offerings,raising around $12.30 billion through such issuances.
Research Roundup:Wednesday, North American real estate edition: A handful of reiterationsare featured in this roundup of recent research reports.
Research Roundup:Wednesday, North American real estate edition: An initiation, a downgradeand an upgrade are featured in this roundup of recent research reports.
The Guidance Report:SNL rounds up real estate company guidance from the past several days.
Market prices and indexvalues are current as of the time of publication and are subject to change.