The Real Deal New York

Real estate company mergers are exploding this year

So far, m&a deals have totaled $29.9B
July 19, 2017 09:15AM

Digital Realty’s A. William Stein and Tom Barrack (Credit: Getty Images)

It’s been a big year so far for mergers and acquisitions of real estate companies, with a volume of $29.9 billion worth in the first half of 2017.

Most of that activity came from the $19.9 billion merger of Colony Capital, NorthStar Realty Finance and NorthStar Asset Management, Real Estate Alert reported. After changing its name to Colony NorthStar, NorthStar Asset Management acquired NorthStar Realty for $12.4 billion. Real estate investment trust Colony NorthStar then scooped up Colony Capital for $6.7 billion.

Before the end of the year, another $19.1 billion in mergers and acquisitions are expected to close. The largest of the 11 announced deals is Digital Realty’s $7.6 billion acquisition of Dupont Fabros.

The annual average number of mergers and acquisitions between 1996 and 2017 was 21, totaling $36.7 billion. At the 2007 peak, that volume swelled to $168.4 billion. In 2009, it was only $758 million. The M&A market is now on the upswing and is on track to exceed last year’s volume of $36.3 billion.

“You’ve got a confluence of different events,” Andy Jonas, Goldman Sachs’ co-head of real estate investment banking, told Real Estate Alert. “More people have a better understanding of the risks and the stability of owning real estate, there’s a low interest-rate environment, and there is a lot of equity capital and debt capital. Those things should make for greater volumes.” [REA] — Kathryn Brenzel