An icon in the REIT and commercial real estate industry, Sam Zell created three of the largest REITs and currently chairs five companies listed on the NYSE. Zell will discuss his new book and provide his views on the state of the economy and current events at REITweek. Request to attend the largest investor conference of the year.
Welltower has agreed to buy Quality Care Properties in an all-cash transaction for approximately $1.95 billion. The transaction, which has a total value of $3.117 billion, also includes a separate agreement by Quality Care Properties that includes selling HCR ManorCare to ProMedica health system and an 80/20 joint venture between Welltower and ProMedica.
Increases in interest rates, especially among short-term rates, have led to a flattening yield curve. Nareit's Calvin Schnure discusses past patterns of rising interest rates and flattening yield curves in prior economic expansions. While recessions are generally preceded by an inverted yield curve, a flatter yield curve like we see today has occurred during the middle of the past several economic expansions, suggesting the outlook for REITs and real estate remains solid.
Rising interest rates mean that borrowing costs for apartment developers will rise, and they also will price some would-be buyers out of the homeownership market, according to CoStar research. The report found that a 100-basis-point increase in the 30-year fixed rate reduces the number of potential homebuyers by 5.3 million households, or 4.2%.
The city Amazon chooses for its second headquarters is likely to see rental rates increase as a result. Some cities on the shortlist, such as Atlanta, will see less of an effect since it is relatively easy to build housing there, but Denver and some midsize cities such as Nashville, would see large increases, as would some very large cities where there is a housing shortage, such as Los Angeles.
It is unclear to analysts whether Sears will be able to extract much more value from its real estate, following a proposed deal in which the company would sell many of its stores and some of its brands to ESL Investments. "The stores that are in the best markets and the best properties will ultimately have residual value," says Edward Dittmer, a senior vice president of credit risk services at Morningstar.
The omnibus budget bill for fiscal year 2018 contained some technical corrections to the tax reform bill, some of which are relevant to REITs, according to Ray Beeman, principal at the Washington Council Ernst & Young practice. But more questions need to be answered, and REITs should settle in for a yearslong change management process to address the bill, he says.
Global Net Lease, whose portfolio is evenly divided between the US and Europe, has about $300 million in properties in various stages of acquisition this year. James Nelson, president and CEO, says the REIT expects to close all of these deals by year end.
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