The Time May Be Right for More M&A in the REIT Sector
Mary Diduch | May 15, 2018
There are several large proposed REIT mergers in the books already in 2018, but analysts in the space say the activity may not be done yet.
Following a long slowdown of consolidation activity, the recent M&A announcements have spanned REIT sectors. First, General Growth Properties Inc. (GGP), a mall REIT, in March agreed to a buyout offer from Brookfield Property Partners. Then, Healthcare REIT Welltower Inc. partnered with not-for-profit healthcare provider ProMedica to acquire Quality Care Properties (QCP), which is focused on post-acute, skilled nursing and memory care/assisted living properties. And Prologis Inc., the largest warehouse owner, also moved to takeover a smaller rival, DCT Industrial Trust Inc.
With wide belief in the market that the current real estate cycle is in its late stages, interest rates and cap rates are creeping up, and debt is readily available. There’s also a large disconnect between private and public real estate values, several analysts note. “The backdrop is certainly conducive to M&A,” says Haendel St. Juste, REIT analyst at Mizuho Securities USA.
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