Thursday, March 10, 2011
Big News, Big Deals, Big Money
As further proof that capital is abundant in the US commercial real estate markets, some big deals have recently been announced which reflect: (1) the continued imbalance of capital supply relative to product availability, and (2) the high values attributed to public entities which are using their capital to purchase assets and enterprised accretively. Two large healthcare deals have been recently announced, Ventas purchasing Nationwide Health Properties for around $5.4BN and Healthcare REIT purchasing Genesis Healthcare for approximately $2.4BN. Accretive acquisitions like these are excellent ways for public vehicles to use strong equity currency to purchase large portfolios accretively for their shareholders. Witness CBRE's acquisition of ING Clarion's non-US asset management business for $940M as yet another example.
Similar stories are playing out in the single asset arena as well with major office and hospitality assets in New York and DC trading at multi-hundred million dollar levels to both public and private equity investors. Barring some economic stumble, such as renewed exectations of inflation and rising interest rates, this trend toward large, coastal market-centric, transactions should continue and public entities such as REITs will be using their strong equity to facilitate such transactions.