OPPORTUNITIES ARE AVAILABLE IN ALMOST EVERY
INVESTMENT CLASS BUT THE OVERRIDING THEME
IN THIS PART OF THE CYCLE IS BUYING SCALE
REIT private earlier that month—Gramercy Property Trust for
$7.6 billion in cash—but the REIT sector overall had been pricing well below private valuations. Indeed, the market has seen
several public-to-private transactions and it is expected that
more will occur this year.
“We have been telling clients this for some time now,” shares
Hans Nordby, managing director of CoStar Portfolio Strategy.
“We’re also doing analyses for clients on which REITs to take private because they are too cheap” nowadays.
But even REITs’ low net asset values don’t tell the whole story
behind the Blackstone-LaSalle deal and the many other acquisitions that have occurred in recent months and years. Transactions
are being driven by a number of factors including the new tax law,
the immense amount of liquidity still waiting to be invested and
the desire for companies to gain scale and diversify into well-per-forming asset classes.
“Companies are looking for deal flow, so they’re making acqui-
sitions,” says Shahab Moreh, head of the real estate practice
group at accounting firm Mazars USA. “The acquiring company
has the capital and the other company has the deal flow.
Combined, the two make for a strong real estate company.”
This is a trajectory the CRE industry has been on for years, says
Greg Leisch, Newmark Knight Frank’s senior managing director of
market research. Over the past 15 years, for example, there has
been a massive consolidation among service providers. “JLL didn’t
exist. Cushman & Wakefield was a completely different entity,” he
points out. “Many service providers have disappeared or been swal-
lowed up because of a need for growth and scale.” He adds that up
until eight years ago, it was essential for companies to have a
national footprint. Since then, going global has been the goal.
A broader global footprint was one of the drivers behind
Colliers International Group’s announcement that it is acquiring