Property trusts are trading at a considerable discount to their physical counterparts, driving a flurry of corporate dealmaking, according to Resolution Capital’s global portfolio manager.
American asset manager Blackstone has made a number of bids for commercial real estate assets as M&A activity in the sector heats up. The private equity player has been tipped to make a hostile bid for the highly sought after Investa Office Fund after established Canadian group Oxford Properties lobbed a last-minute takeover proposal late in the cylce.
“There is that discount between the REIT market and the physical market. Part of that is because you’ve seen equities markets increasing so people have been rotating out of REITs. That is driving a lot M&A activity,” Resolution Capital global portfolio manager Marco Colantonio said.
Speaking at a global REIT market update in Sydney on Wednesday, Mr Colantonio noted that Blackstone has previously used its trading updates to downplay the REIT market, suggesting it had gone cold on listed property trusts. Lately, its actions show the opposite to be true.
“In the next three months, they made four takeover bids for REITs, including one locally here, the Investa Office Fund.”
Commenting on the bidding war between Blackstone and Oxford Properties, Mr Colantonio said Oxford are not new to the game.
“They’ve been around a while. You’ve got two seasoned investors coming into the Aussie office market and bidding for one of the office REITs.”
Blackstone recently lost its fight for US-based LaSalle Hotels to Pebblebrook Hotel Trust, after the two giants agreed to a US$5.2 billion merger.
Back in May, Blackstone snapped up NYSE-listed commercial real estate manager Gramercy Property Trust for US$7.6 billion.
Over in Europe, Blackstone and Centrebridge will offer US$3.5 billion for the Madrid headquarters of Banco Santander SA. Earlier in the year, Blackstone snapped up Spain’s first ever REIT, Hispania. Its portfolio includes offices, over 600 private dwellings and 46 hotels.
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