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ANALYSIS: U.S. REIT M&A Deals Outperforming Overall Market

Aug. 13, 2020, 5:00 PM

Looking at M&A transactions with at least one U.S. party, REITs are doing more deals this year than they did during the same period last year.

Mergers and acquisitions volume over all sectors involving at least one U.S. party is about half what it was during the same period last year. And overall M&A deal count, which is catching back up, trails the same period in 2019 by about 15%. But by both measures, the subset of these deals involving real estate investment trusts (REITs) is doing better.

The number of M&A deals involving REITs is up by more than 50% this year compared to the same period in 2019. And while M&A deal volume involving REITs is down compared to the same period last year, its 30% drop is less severe than that of the overall market. At the current pace, the REIT M&A deal count, which has already surpassed the deal count for the whole year of 2018, is on track to reach the same level or even possibly to surpass 2019, which was a peak year for the industry group.

This year, roughly 1,300 REIT deals have been announced, as compared with roughly 850 deals during the same period in 2019. By volume, $56 billion in pending and completed deals involving at least one U.S. party and one REIT party were announced, as compared with $83 billion during the same period last year.

Transactions involving America’s confused shopping malls are particularly interesting REIT deals to watch during the pandemic. First, there was the big deal that fell apart. Then, there’s the potential trend of shopping mall operators acquiring their bankrupt retail tenants: In February, a consortium of Simon Property Group Inc., Brookfield Property Partners LP and Authentic Brands Group LLC bought bankrupt Forever 21 Inc. Now, two of the same acquirers in that deal, Simon Property Group Inc. and Authentic Brands Group LLC, are expected to win the bid for bankrupt Brooks Brothers Group Inc. And there’s the rumored logistics partnership talks between Amazon Inc. and Simon Property Group Inc. which could drive a whole new category of REITs deals altogether.

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