REIT M&A Volume Reaches $108B Year-To-Date

Merger and acquisition activity within the real estate investment trust sector this year reached hit $108 billion in transaction volume as of Sept. 30, according to new data published by JLL JLL.

What Happened: During the second quarter, JLL found 63% of REITs exceeded consensus funds from operations estimates, thus resulting in REITs outperforming the S&P 500 by 1,100 basis points.

All major REIT sectors turned in vibrant performances for the year to date, particularly sectors that previously faced difficulties including retail (56% gain), office (15% gain) and hospitality (15% gain).

JLL also determined that alternative asset classes — cold storage, data center, life sciences, manufactured housing communities, medical office buildings, self-storage, seniors housing, single-family rental, skilled nursing facilities, gaming and student housing — were outpacing the traditional asset classes.

Related Link: When Billionaires Try To Hide Their Money: 5 Things You Need To Know About The Pandora Papers Revelations

Why It Matters: JLL added that the median REIT owns approximately $4.5 billion of real estate, which is more than four times higher than the size of a median REIT over the last two decades. Furthermore, office REITs are on pace for more than $10 billion in acquisitions activity for the first time in five years, and the spike in volume increased the share of total REIT transaction volume for the office sector for the first time since 2015.

“REIT M&A volume has broken a 15-year record that was set back in 2006,” said Steve Hentschel, head of the M&A and Corporate Advisory Group with JLL Capital Markets. “All major sectors contributed to the record, which implies a very favorable deal making environment for our sector. Confidence has returned, most REITs have strong currencies to use in strategic mergers, debt is historically cheap and debt markets are liquid.”

Photo: Jason Goh from Pixabay.