The Real Deal New York

Mergers and acquisitions are coming on strong in the REIT industry

Buyers are taking advantage of low stock prices
June 13, 2018 02:41PM

NYC Student Housing (Credit: EHS)

Mergers and acquisitions are heating up in the world of real estate investment trusts, thanks largely to cheap stock prices.

Buyers are going after REITs that own properties likely to do well during downturns, according to the Wall Street Journal. These include nursing facilities, industrial properties and student housing, but some buyers have also placed bets on riskier properties like hotels.

There have been eight deals announced for REITs since April totaling $16.5 billion, up from just two deals totaling $4.4 billion in the first quarter of the year. Last year’s fourth quarter saw $16.4 billion of REIT acquisitions.

Slow income growth and concerns about higher interest rates have caused REIT shares to be sluggish over the past few years, but the increasing number of mergers and acquisitions has started to change this. The REIT index gained 3.7 percent and 0.5 percent in March and April compared to a 2.5 percent decline at the S&P 500.

Pebblebrook and Blackstone Group are currently in a bidding war for LaSalle Hotel Properties, with Blackstone making a $3.7 billion offer and Pebblebrook countering with a $4.17 billion offer.  Welltower has also made a $2 billion offer to buy Quality Care Properties.

Blackstone Group recently announced it was tripling its fundraising goal for the REIT it started last year from $5 billion to $15 billion.  [WSJ]  – Eddie Small