REITs and the broader markets remained in the red Friday, April 29, as two office REITsrevealed plans to combine in a roughly $2 billion stock-for-stock deal and to simultaneouslyspin off their Houston properties.
The MSCI US REIT Index (RMZ) dropped 0.95% to 1,129.39, and theSNL US REIT Equity Index fell 0.82% to finish at 301.95. The Dow Jones IndustrialAverage lost 0.32% to close at 17,773.64, while the S&P 500 gave up 0.51% toend the day at 2,065.30.
Office REIT peers CousinsProperties Inc. and ParkwayProperties Inc. agreed to tieup in a move that the companies said will form a combined portfolioof 41 assets in urban Sun Belt markets.
The stock-for-stock merger deal, reportedlyvalued at more than $2 billion, will see Parkway shareholders receiving 1.63 Cousinscommon shares for each Parkway share they own.
Simultaneously, the companies will spin off their Houston propertiesinto a new publicly traded REIT, dubbed HoustonCo,which will be led by Parkway CEO Jim Heistand. The REIT spinoff's portfolio willcomprise five class A office assets in the Houston submarkets of Galleria, Greenwayand Westchase.
Cousins will continue to be led by President and CEO Larry Gellerstedtand the existing senior management team after the merger. The merger deal and spinoffare slated to close during the fourth quarter, and the companies expect the transactionsto be FFO-per-share neutral in 2017.
Shares of Cousins dropped 3.36% to $10.35 on April 29, whileParkway shares jumped 6.47% to $16.45.
InvenTrust PropertiesCorp. announced after market close Thursday that it its spinoff of Highlands REITInc. via a taxable pro rata distribution.
As part of the spinoff, the ownership of Highlands' portfoliowas consolidated into the newly spun-off REIT and Highlands' board was expandedto three members from one with the appointments of R. David Turner and Paul Melkus.
The spinoff,completed April 28, resulted in InvenTrust stockholders receiving 1 Highlands commonshare for each InvenTrust common share held at market close April 25.
In capital offerings, BrixmorProperty Group Inc. announced a secondary offering of 20.0 million shares of its common stock by BlackstoneReal Estate Partners affiliates.
The offering, pricedat $25.20 per share, will bring Blackstone's stake in Brixmor to about 30.5% ofthe REIT's outstanding interests.
Brixmor shares declined 2.02% to $25.25 on Friday.
Washington RealEstate Investment Trust kicked off an upsized public offering of 4,625,000 common shares, withplans to use the proceeds to help fund an acquisition.
The offeringwas priced at $28.20 per share, representing gross proceeds of roughly $130.4 million.It includes a 30-day option for underwriters to buy up to 693,750 additional shares.
Washington REIT shares gave up 2.38% on Friday to $28.67.
Certain of GeneralGrowth Properties Inc.'s units amendedan existing $1.4 billion corporate loan to reduce the recourse to 50% from 100%and extend the term through April 25, 2019, with two one-year extension options.
General Growth shares fell 2.50% on April 29 to $28.03.
STORE Capital Corp.landed long-term unsecureddebt financing amounting to $300 million.
The financing consists of $200 million of senior notes and a$100 million five-year term loan, with the proceeds expected to be used to trimamounts outstanding under the company's unsecured credit facility and for generalcorporate purposes.
STORE Capital shares slid 0.70% to $25.67 on April 29.
In earnings, AmericanTower Corp. notcheda 17.3% year-over-year gain in AFFO and EssexProperty Trust Inc. reporteda 16% year-over-year increase in FFO during the first quarter. also year-over-year growth in FFOduring the period.
Meanwhile, VentasInc. and Digital RealtyTrust Inc. both reported year-over-yeardeclines in their respectivenormalized FFO per share and FFO per share during the period.
American Tower shares edged up 0.72% to $104.88 on Friday, whileEssex shares lost 1.73% to $220.45 and shares of Host Hotel were flat at $15.82.Shares of Ventas dipped 0.22% to $62.12 and Digital Realty shares ticked down 0.06%to $87.98.
In executive moves, DDRCorp. CFOand Treasurer Luke Petherbridge is leavingthe company to become president and CEO of Excel Trust.
Shopping center REIT Excel Trust was bought out by a Blackstone Real Estate-managed fund in 2015.
DDR shares dropped 1.30% on Friday to $17.50.
Conference call coverage
Houston will getworse before it gets better, Camden execs say: Camden Property Trustexecutives said in an earnings conference call that continued low oil prices andjob losses have made Houston the multifamily REIT's weakest market.
Ventas CEO courtsgeneralist investors ahead of GICS change: Debra Cafaro, Ventas Inc.'schairman and CEO, said the company should be "incredibly attractive" togeneralists.
Cousins, Parkwaydeal talks go back two years: Parkway Properties' president and CEOsaid no sensible private bids came in during the companies' wide-ranging negotiations.
Ventas detailsdebt investment in Blackstone life-science properties: The $140 millioninvestment was linked to properties in the former BioMed Realty Trust portfolio,which Blackstone Group LP acquired in January.
HoustonCo a valueplay in its own right, Cousins, Parkway execs say: On a conference call,executives touted the strategic advantages of a Houston-only REIT and the resilienceof the city that has been undermined by recent energy market volatility.
The Week in USReal Estate: 2 office REITs to combine; $10.5B REIT consolidation reportedly eyedby AR Global: The April 29 weekly news roundup in the North Americanreal estate space also features a gaming REIT capping off its roughly $1.1 billionIPO, spinoff updates by two companies and a handful of high-value deals on the propertyfront.
Best of SNL: RealEstate, most read: The 10 most read real estate articles for the weekending April 29.
Best of SNL: RealEstate, editors' picks: Our real estate editors' picks for the beststories of the week ending April 29.
The Property Ledger:Retail Opportunity picks up 2 centers; Duke Realty details $90M in Q1 property sales:The April 29 North American property news roundup also features Ontario asset salesby InterRent for approximately C$21.2 million and the $28.3 million acquisitionof a distribution center by Jones Lang LaSalle Income Property Trust.
Market prices and indexvalues are current as of the time of publication and are subject to change.