{"id":1004753345,"date":"2025-04-03T01:36:15","date_gmt":"2025-04-03T09:36:15","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004753345"},"modified":"2025-04-15T04:27:07","modified_gmt":"2025-04-15T12:27:07","slug":"is-ma-activity-back-in-commercial-real-estate","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/is-ma-activity-back-in-commercial-real-estate\/","title":{"rendered":"Is M&A Activity Back in Commercial Real Estate?"},"content":{"rendered":"
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\"Headshot<\/a>
James Park of CBRE Investment Banking believes we’re going to see more deals soon, but not necessarily different from previous cycles. Image courtesy of CBRE<\/em><\/figcaption><\/figure><\/div>\n\n\n

After roughly four years of hibernation, CRE mergers and acquisitions are once again awakening. <\/p>\n\n\n\n

Among others, so far this year, Blackstone completed its $4 billion acquisition of Retail Opportunity Investments Corp.<\/a>, an owner of more than 90 grocery-anchored assets on the West Coast. Meanwhile, Apollo announced<\/a> that it was buying Bridge Investment Group Holdings, an alternative commercial real estate investment manager that owns industrial, renewable energy and other assets, in a deal valued at about $1.5 billion. <\/p>\n\n\n\n

Another global private equity shop, Barings, recently said that it was acquiring Artemis Real Estate Partners<\/a>, a sponsor of value-add and opportunistic, core plus and credit funds that invests across the commercial property spectrum. <\/p>\n\n\n\n

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READ ALSO:<\/strong> Forecasting CRE Investment in a Chaotic World<\/a><\/p>\n\n\n\n

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To top it off, Pershing Square continues to seek a transaction with Howard Hughes Holdings after initiating merger overtures last year. Pershing Square already owns 37.6 percent of Howard Hughes shares, and following the recent rejection of Pershing Square\u2019s revised proposal to increase its ownership to 48 percent for $900 million, the parties agreed to keep exploring a deal through April 7.<\/p>\n\n\n\n

The uptick in activity suggests that CRE has entered a new entity-level deal cycle, observers said. Stabilizing interest rates, a horde of ready capital, and some unspectacular stock performances are fueling the transactions and shifting commercial property trends<\/a>. <\/p>\n\n\n

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\"Headshot<\/a>
Deloitte principal Nate Florio sees some pent-up demand, but not a full-fledged buying spree in the M&A space. Image courtesy of Deloitte<\/em> <\/figcaption><\/figure><\/div>\n\n\n

But entrenched managements at smaller REITs that are likely to be targets, as well as skepticism among company board members about the ability of certain suitors to close deals, could ultimately hold back a more robust period of dealmaking, said James Park, senior managing director, CBRE Investment Banking.<\/p>\n\n\n\n

\u201cI think we\u2019re definitely going to see more M&A activity, but I\u2019m not sure it will be anything different from previous cycles,\u201d he added. \u201cFundamentally, it\u2019s still very hard to get these deals done, and there are some obstacles and constraints to companies being taken out left and right.\u201d<\/p>\n\n\n\n

From a macro perspective, lingering uncertainty over the movement of interest rates, as well as which direction the economy is headed, has created a more cautious investment environment at the moment, added Nathan Florio, principal with Deloitte & leader of the firm\u2019s advisory and consulting real estate practice.<\/p>\n\n\n\n

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READ ALSO:<\/strong> How Much Will CRE Investment Increase This Year?<\/a><\/p>\n\n\n\n

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\u201cThere have been some green shoots in the M&A market, but we\u2019re not seeing a full-fledged buying spree,\u201d Florio reported. \u201cSome pent-up demand that has been on the sidelines and waiting for a better time to invest is doing some deals, but there are others who are still waiting to see what happens.\u201d<\/p>\n\n\n\n

Brighter times<\/h2>\n\n\n\n

Still, the atmosphere is quite an improvement over the last few years, when a spike in interest rates killed the debt markets, Park pointed out. Not only have spreads tightened, but the amount of debt available has also grown substantially.<\/p>\n\n\n

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\"Headshot<\/a>
Deloitte’s Jonathan Keith pointed out that investors are now coming to terms with the interest rate environment. Image courtesy of Deloitte<\/em><\/figcaption><\/figure><\/div>\n\n\n

Investors are coming to grips with the \u201chigher-for-longer\u201d interest rate environment, which is leading to the repricing of some assets, said Jonathan Keith, managing director in Deloitte\u2019s risk and financial advisory. <\/p>\n\n\n\n

\u201cThere\u2019s maybe more of an understanding today that interest rates are going to be what they\u2019re going to be,\u201d Keith said. \u201cAnd if you\u2019re going to play in the M&A market in such an environment, you need to figure out how you\u2019re going to deploy capital.\u201d<\/p>\n\n\n\n

In addition to the greater amount of available debt, new investment partners such as insurance companies and retail investment channels have joined sovereign wealth funds, pension funds and other institutional investors in funneling money into private M&A suitors, said Tim Bodner, partner in PwC\u2019s real estate practice & leader of the firm\u2019s U.S. and global real estate deals.<\/p>\n\n\n\n

Value hunting<\/h2>\n\n\n\n

Assuming that deal activity continues to build momentum this year, Bodner anticipates that buyers will focus on public companies with market capitalizations of around $5 billion or less that have bumped along with uninspiring shareholder returns. Those types of metrics \u201cshine a brighter light on the importance of scale,\u201d he continued, \u201cand perhaps it makes sense to partner with a private capital firm or another public company that can provide it.\u201d<\/p>\n\n\n

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\"Headshot<\/a>
PwC’s Tim Bodner is seeing some new types of investors joining the commercial real estate M&A space. Image courtesy of PwC<\/em><\/figcaption><\/figure><\/div>\n\n\n

Currently, more lodging companies fall into that category than most other sectors, Bodner said. Along those lines, Hyatt Hotels recently agreed to buy Playa Hotels & Resorts, an owner of 24 all-inclusive hotels across Mexico, Jamaica and the Dominican Republic. Hyatt is paying $2.6 billion for the company, or $13.50 per share, which was a 40 percent share price premium just prior to the disclosure that the two were discussing a deal in December.<\/p>\n\n\n\n

Similarly, the struggling office sector could present buying opportunities as many REITs in the sector have lost billions of dollars in market capitalization over the past few years. But investment committees largely remain wary of the assets, Park said. What\u2019s more, privately owned office portfolios could end up being more attractive, he added.<\/p>\n\n\n\n

\u201cThere is no lack of opportunity in the private office space,\u201d he said. \u201cSo do buyers really want to go through the brain damage of taking a public company private versus focusing on private deals where they might end up at the same place?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A handful of transactions suggest a new dealmaking cycle, but questions remain.<\/p>\n","protected":false},"author":890,"featured_media":1004753376,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21783,23891,21742,51037],"tags":[32789,32782,36147],"class_list":["post-1004753345","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-investment","category-national","category-latest","category-trends","tag-cbre","tag-deloitte","tag-pwc"],"acf":[],"yoast_head":"\nIs M&A Activity Back in Commercial Real Estate? - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Commercial real estate M&A activity is thawing. 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