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REIT Replay: Soft opening

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REIT Replay: Soft opening

REITsand the broader markets posted notable losses Thursday, Sept. 29,as newly minted MedEquities Realty Trust declined in its first day of trading.

TheMSCI US REIT Index (RMZ) fell 1.41% to 1,203.27, and the SNL US REIT EquityIndex dropped 1.28% to finish at 321.76. The Dow Jones Industrial Average wasdown 1.07% to close at 18,143.45, while the S&P 500 decreased 0.93% to endthe day at 2,151.13.

Sharesof new healthcare REIT MedEquities Realty Trust Inc. closed 3.42% lower, at$11.59, on their first day of trading.

OnWednesday, the company announced the pricing of its IPO of 19,925,333 common shares at $12.00 per share,which is the low end of its projected range. The company said itexpects the net proceeds from the offering, which is set to close Oct. 4, tocome to roughly $210.2 million. It has also granted the underwriters a 30-dayoverallotment option to purchase up to 2,988,800 additional shares.

MedEquitieswill use the net proceeds to redeem its outstanding preferred stock, repayamounts under its secured credit facility and for general corporate purposes.

activist investor Jonathan Litt, founder and chief investment officer ofLand & Buildings InvestmentManagement LLC, in a Thursday release called for the REIT toslash its dividend byat least 50%, adding that the company's stock will have to drop another 30% toreach fair value, citing a fall in apartment rents in Investors Real Estate'senergy-sensitive North Dakota markets.

Sharesof Investors Real Estate fell 4.62%, closing at $5.99.

Alsoon Thursday, Michael Ashner and Steven Witkoff, the co-owners of WW Investors,said in a letter toNew York REIT’schairman that they are going to submit a proposal to manage the REIT, arguingthat their plan would save more than $50 million over the company's existingexternal management agreement. Ashner and Witkoff added that New York REIT'sboard should be giving greater consideration to WW Investors' own directornominees instead of hiring a search firm to recruit new board members.

NewYork REIT shares went down 1.82% to close at $9.17.

Meanwhile,American Tower Corp.priced its offeringof two series of senior notes consisting of $600.0 million of notes due 2022and $400.0 million of notes due 2027 at 99.858% and 99.933% of their facevalue, respectively. The company said Wednesday that it expects the registeredpublic offering to generate about $990.6 million in net proceeds, which it willuse to repay existing debt under its term loan obtained in October 2013, asamended. The 2022 notes and 2027 notes will carry annual interest rates of2.250% and 3.125%, respectively.

AmericanTower shares edged up 0.75%to close at $113.48.

Reportssurfaced Wednesdaythat Artis Real Estate InvestmentTrust is contemplating selling approximately C$300 million worth ofits retail and industrial properties in Alberta, with other REITs, assetmanagers and real estate-focused pension funds identified as potential suitors.According to the report, the company is looking to sell the properties inmultiple deals with several buyers, with the possibility that the propertiescould be sold by the end of 2016.

ArtisREIT shares shed 0.32% to end the day at C$12.62.

Stifelanalysts John Guinee, Erin Aslakson and Kyle McGrady in a Wednesday said they are upgradingtheir investment opinion of FirstPotomac Realty Trust to "hold" from "sell" andincreasing their per-share price target to $9.50 from $9.00, following thecompany's recent share price weakness, and updating their thoughts on thecompany's business plan.

FirstPotomac shares dropped 0.53%, closing at $9.33.

Meanwhile,commenting on the stock-for-stock merger between Cousins Properties Inc. and and the spinoffof both companies' Houston-based assets into a new, publicly traded REIT, thesame Stifel analysts said that while they were "very supportive" ofthe merger-spin and have a "very high regard" for the respectivemanagement teams of both companies, they are downgrading their investmentopinion on both companies to "sell" from "hold."

Postspin, the analysts expect Cousins Properties to trade at approximately a 6.0%to 6.5% implied cap rate and Parkway to trade at roughly a 9% to 10% impliedcap rate.

CousinsProperties shares declined 3.06% to close at $10.47, while Parkway shares weredown 3.35% to close at $17.04.

Onthe macro front, STR data showed that U.S. hotels logged positive performance forthe week ended Sept. 24. On a yearly basis, RevPAR rose 9.0% to $94.00, and ADRincreased 6.3% to end the week at $130.52. Occupancy, meanwhile, grew 2.6% to72.0%.

Meanwhile,the latest figuresfrom the National Association of Realtors Pending Home Sales Index indicatedthat pending home sales in August fell to their lowest level since January. Theindex slid 2.4% to 108.5 in August from 111.2 in July, and dropped 0.2% fromthe previous year, bringing the index to its second-lowest reading in 2016.

Now featured on S&PGlobal Market Intelligence

Hires andFires: Real Estate moves through Sept. 28, North America edition:This feature presents a weekly rundown of recent significant management andboard changes and personnel moves in the North American real estate industry,including U.S. REITs and REOCs, homebuilders and gaming operators.

Proxy battlemay loom in Colony/NorthStar deal after top shareholder vows to blockmerger: Analysts are taking a wait-and-see approach in whether acomplex tri-party merger between NorthStar Asset Management, NorthStar RealtyFinance and Colony Capital can be completed after a top shareholder pledged tovote against the combination in its current form.

Market prices andindex values are current as of the time of publication and are subject tochange.