What does the wave of M&As mean for the market?

Massey Knakal-Cushman, Cushman-DTZ and Starwood-Marriott were just a few of the major deals this year

TRD MIAMI /
Dec.December 24, 2015 04:30 PM

From the New York website: The global economy saw over $3.8 trillion in mergers and acquisitions in 2015, surpassing the activity seen in 2007. The New York property market, too, had a bumper M&A year, with some of the biggest commercial firms joining forces. But are all these big deals a sign of economic health, or another indication that the market is due for a slowdown?

Major real estate mergers recently include the $100 million deal between commercial brokerages Massey Knakal Realty Services and Cushman & Wakefield, followed by DTZ’s $2 billion acquisition of Cushman; Marriott International’s $12.2 billion purchase of Starwood Hotels & Resorts Worldwide; the Blackstone Group’s $8 billion acquisition of BioMed Realty Trust, and its $6 billion purchase of Strategic Hotels & Resorts.

Another major acquisition in the works, with SL Green Realty planning to buy New York REIT for an as-yet-undisclosed price.

The numbers in these deals are impressive, but experts say they’re often a sign that companies can no longer grow organically in the existing market.

David Rosenberg, chief economist at wealth management firm Gluskin Sheff, told Bloomberg all the M&A activity  is a “classic late-cycle development.”

“When companies embark on peak M&A activity, it is more often than not coinciding with a peak in the stock market and, dare I say, a peak in the business cycle,” he said.

The last big wave of mergers occurred in 2007, just before the financial crisis. The previous peak was reached just before the dot-com bubble collapsed in 2000. Years of low interest rates are part of the impetus for the current boom in deals, Jim Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg.

“In a world where borrowing money is virtually free, you’re probably doing more of these deals than you should,” he said.

But not everyone sees high M&A volume as a problem. Torsen Slok, chief international economist at Deutsche Bank, told Bloomberg the surge in M&As was a sign of strength.

“Corporate America’s appetite for risk is finally beginning to thaw,” he said. Even if activity slows down next year, I think we are still two or three years away from a recession.” [Bloomberg]Ariel Stulberg


Related Articles

arrow_forward_ios
Ericka Witkowski

Former Cushman & Wakefield broker launches her own firm

Former Cushman & Wakefield broker launches her own firm
From left: Denny St. Romain and Jubeen Vaghefi

Movers & Shakers: Longtime JLL brokers join CushWake & more

Movers & Shakers: Longtime JLL brokers join CushWake & more
Shane Neman, and Mauricio Bello Richard Waserstein, with 525 Northwest 77th Street Marriott in Boca

Blackstone sells Marriott hotel in Boca Raton

Blackstone sells Marriott hotel in Boca Raton
Fordome Investment Group’s Kris Rodriguez and Blackstone’s Stephen Schwarzman (Credit: Getty Images, Google Maps)

Blackstone plans to build new Medley warehouse

Blackstone plans to build new Medley warehouse
Placeholder image

Blackstone sells Weston hotel for $12M

Blackstone sells Weston hotel for $12M
Industrial sales are up

South Florida’s industrial sales jump to over $1B in Q3 2019

South Florida’s industrial sales jump to over $1B in Q3 2019
Daily Digest Miami

Scaramucci slashes his sights on his Opportunity Zone fund, Florida’s first LGBTQ+ senior housing development breaks ground: Daily digest

Scaramucci slashes his sights on his Opportunity Zone fund, Florida’s first LGBTQ+ senior housing development breaks ground: Daily digest
Blackstone CEO Stephen A. Schwarzman and 5120 Northwest 165 Street

Blackstone buys two Miami Gardens industrial properties for $14M

Blackstone buys two Miami Gardens industrial properties for $14M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...