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Canadian merger to create C$16B REIT; Wyndham agrees $1.3B European divestment

Commercial real estate

* Choice Properties Real Estate Investment Trust and Canadian REIT signed an acquisition deal to create what will be Canada's largest REIT with an enterprise value of roughly C$16 billion.

Choice Properties will acquire all of Canadian REIT's assets and assume all of its liabilities, including long-term debt and residual liabilities. Canadian REIT will redeem all its outstanding units for C$22.50 in cash and 2.4904 Choice Properties units per Canadian REIT unit.

At the Feb. 14 closing price of C$12.49 apiece for Choice Properties units, the deal translates to C$53.61 per Canadian REIT unit, reflecting a 23.1% premium to the Canadian REIT closing unit price on the same day. The transaction is expected to complete in the second quarter.

* Wyndham Worldwide Corp. signed a definitive agreement to divest its European vacation rental business to global private equity firm Platinum Equity for approximately $1.3 billion.

Platinum will gain ownership of more than 110,000 units across over 600 destinations through the transaction. The vacation-rental business generates roughly $750 million in annual revenue and operates more than 24 local brands, including James Villa Holidays, Landal GreenParks and Novasol.

* WeWork Cos. is expected to take up 50,000 square feet at the $400 million Coda office tower that is under construction in Atlanta's Tech Square development, the Atlanta Business Chronicle reported, citing an unnamed source who said a lease could be signed by the end of February. The 770,000-square-foot Coda tower counts Georgia Tech as its anchor tenant.

Citing Cushman & Wakefield, the report noted that Atlanta is the fifth largest co-working market in the U.S. WeWork previously leased 48,000 square feet at Cousins Properties Inc.'s Terminus 100 office tower in Atlanta's Buckhead neighborhood.

* CBRE Global Investors is placing the 1650 Arch St. office building in Philadelphia's Center City on the market, the Philadelphia Business Journal reported, citing a person familiar with the situation. The property spans 553,000 square feet, and the U.S. Environmental Protection Agency occupies 307,847 square feet.

CBRE paid roughly $70 million for the property in 2015 when it acquired it along with the United Plaza property, which it sold in 2017. The report noted that the 93% occupied building could sell for roughly $85 million.

* The owner of the 589 Fifth Ave. retail and office building in Manhattan, N.Y., is looking to sell a leasehold interest in the property and a 99-year lease on the ground underneath it, The Real Deal reported, citing Real Estate Alert. Unnamed sources told Real Estate Alert that the property could be worth up to $400 million.

The 17-story, 184,000-square-foot building is owned by an entity controlled by London-based Mactaggart Family and Partners. The building is anchored by H&M, which fully occupies its five-story, 68,000-square-foot retail portion in a lease expiring in 2033. The property's 116,000-square-foot office portion is 92% occupied, the report noted.

* According to Dodge Data & Analytics, New York, Miami and Los Angeles saw major declines in funding for construction starts in 2017, The Real Deal reported. For the 20 cities with the highest dollar contribution for new construction projects in 2017, the total came to $194.7 billion, compared to $209 billion in 2016.

The multifamily sector saw a 12% overall decline while commercial building saw a 3% decrease. For the New York-Northern New Jersey-Long Island metro area, total construction starts amounted to $25 billion, down 16% compared to 2016.

After the bell

* Hyatt Hotels Corp. disclosed fourth-quarter 2017 net income attributable to the company of $76.0 million, or 62 cents per share, a rise of 85.4% in the aggregate from $41.0 million, or 31 cents per share, in the fourth quarter of 2016.

* Marriott International Inc. reported fourth-quarter net income of $201 million, or 54 cents per share, a fall of 17.6% in the aggregate from $244 million, or 62 cents per share, in the comparable 2016 period.

* Equinix Inc. reported year-over-year gains in funds from operations and adjusted funds from operations, increased its common dividend and detailed a major property deal in Texas.


* The Wall Street Journal featured a report on the rising home prices in the Bronx, N.Y., surpassing the previous record set in 2006. Citing the Real Estate Board of New York, the publication reported that the median price for a house in the Kingsbridge Heights and nearby neighborhoods increased 15% year over year to $470,000 in the fourth quarter of 2017.

The average sale price across the Bronx for one-to-three-family houses during the period was $515,000, reflecting a 2% gain from the previous peak set in the fourth quarter of 2006.

The day ahead

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

In Asia, the Hang Seng grew 1.97% to 31,115.43, and the Nikkei 225 was up 1.47% to 21,464.98.

In Europe, as of midday, the FTSE 100 was up 0.58% to 7,255.48, and the Euronext 100 had climbed 1.02% to 1,011.90.

On the macro front

The jobless claims report, the PPI-FD report, the Empire State Mfg Survey, the industrial production report, the National Association of Home Builders' housing market index, the EIA natural gas report, the Fed balance sheet and the money supply report are due out today.

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