Blackstone to buy QTS Realty in $10B deal; Colony Capital signs $535M asset sale


S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

The mood at Nareit’s annual REITWeek conference was upbeat about property operations and improving real estate fundamentals but marked by Zoom fatigue after more than a year of the COVID-19 pandemic, BMO Capital Markets analysts wrote in a pair of notes.

Demand for apartments has surged since April, with multifamily real estate investment trusts including Mid-America Apartment Communities Inc., Independence Realty Trust Inc. and Camden Property Trust reporting strong rent growth and Equity Residential seeking to expand into markets including Denver, Seattle, Austin, Atlanta and one to two others, BMO’s Juan Sanabria wrote in a June 10 note.

In the office sector, tours by potential tenants are up, but rents are still under pressure despite landlord optimism, Sanabria added.

Despite concerns about inflation and labor availability, “the higher end U.S. consumer is in good shape, having benefitted from home price appreciation, a strong stock market and increased job availability/mobility,” Sanabria wrote, adding, “The question we continue to assess is what level of recovery is already priced and where are the value opportunities as we step back and reassess the durability of cash flows [and] structural changes.”

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M&A front

* The Blackstone Group Inc. funds agreed to acquire data center REIT QTS Realty Trust Inc. in a $10 billion deal, including debt. The purchase price of $78.00 per QTS share in cash reflects a 21% premium to the shares’ June 4 closing price. The deal is expected to close in the second half of 2021.

* Blackstone Real Estate Partners and Starwood Capital Group’s sweetened offer of $20.50 per paired share for Extended Stay America Inc. and its paired-share REIT ESH Hospitality Inc. was still opposed by independent proxy adviser Glass Lewis & Co. LLC, which said the new offer still “does not go far enough to address outstanding concerns with the deal process, timing and valuation.”

Of reviews and plans

* U.S. data center landlord Digital Realty Trust Inc. is considering an IPO that could bring in up to $400 million for a planned entity that could be structured as a REIT or a business trust in Singapore, Bloomberg News reported, citing people familiar with the matter.

* Canada’s Inovalis Real Estate Investment Trust completed its strategic review and opted to pursue a strategy that includes new core and core-plus investments in its current and new European markets, along with an asset recycling program.

* Colony Capital Inc. is changing its name to DigitalBridge Group Inc. and its NYSE ticker symbol to DBRG, effective June 22, with the move reflecting the company’s transition in recent years away from diversified real estate investments to the digital infrastructure sector. The company also agreed to sell a majority of its other equity and debt portfolio of real estate assets to private equity firm Fortress Investment Group LLC for gross proceeds of $535 million.

Property blocks

* Brookfield Property Partners LP and Douglas Development Corp. are looking to sell a 49% stake in a 756,000-square-foot office complex in Washington, D.C., worth roughly $825 million, Real Estate Alert reported.

* Harrison Street Real Estate Capital LLC is spending about $1.2 billion to buy a 24-property seniors housing portfolio across Nevada and California. Healthcare REIT Healthpeak Properties Inc. is selling 12 of the properties, and Gallaher Cos. LLC is selling the rest.

* Shopping center REIT Federal Realty Investment Trust bought or is under contract to buy four assets totaling 1.75 million square feet on 125 acres of land across the U.S. at a gross value of $407 million.

Fundraising

* Property technology-focused venture capital firm RETV Management LLC’s new fund raised $165 million with contributions from several REITs including Invitation Homes Inc., Essex Property Trust Inc., Mid-America Apartment and UDR Inc., among other investors.

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REIT M&A is back after a year of COVID-19 ‘bunker mentality’



Read More: Blackstone to buy QTS Realty in $10B deal; Colony Capital signs $535M asset sale

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