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Rayonier’s Sustainable Forestry Helps Build Nassau County

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Published at Wed, 25 Oct 2017 21:51:18 +0000

Ryman is Singing the REIT Tune

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Published at Wed, 25 Oct 2017 21:53:19 +0000

Real Estate Working For You

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Published at Wed, 25 Oct 2017 20:03:44 +0000

Health Care REIT Welltower Finds More Retirees Want Big City Life

In the latest edition of The REIT Report: NAREIT’s Weekly Podcast, Welltower (NYSE: HCN) CFO John Goodey discussed the health care REIT’s new research on the changing tastes and preferences of retirees.

According to Welltower’s research, aging Americans are no longer seeking to leave major cities and metropolitan areas to retire. Upwards of 80 percent of respondents to a Welltower survey of residents in major cities in North America indicated that they preferred staying there in retirement. “People are really committed to living in cities most of their adult life,” Goodey said.

Welltower found that a number of factors are contributing to retirees’ desire to stay in cities, according to Goodey. They include access to quality health care, proximity to family members, potential employment opportunities and community engagement.

“People actually want to remain very much part of the broader community and use the amenities that big cities have to offer,” Goodey said.

In terms of ramifications for real estate companies and local officials, Goodey noted that aging Americans will want cities that are more accessible to them and living spaces that are more hospitable to their physical needs. This presents an opportunity for companies such as Welltower to design new facilities to meet their demands.

(Subscribe to The REIT Report via iTunes.)

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Published at Tue, 24 Oct 2017 16:37:16 +0000

Timberland REIT Potlatch to Acquire Deltic Timber in All-Stock Deal

Timberland REIT Potlatch Corp. (NASDAQ: PCH) said Oct. 23 it will acquire Deltic Timber Corp. (NYSE: DEL) in an all-stock transaction valued at approximately $1.15 billion.

The combined company will operate as PotlatchDeltic Corp., and shares of its stock will retain Potlatch’s ticker symbol. Executives at both firms said PotlatchDeltic will benefit from operational synergies resulting from expanded harvest volumes and increased lumber production.

Under the terms of the transaction, Deltic stockholders will receive 1.8 common shares of Potlatch stock for each Deltic common share they own. Based on Potlatch’s closing share price on Oct. 20 of $53, the deal values Deltic shares at $95.40, a 7 percent premium on their Oct. 20 closing price. Potlatch stockholders will own approximately 65 percent of the combined company, with Deltic stockholders owning the remaining 35 percent.

Potlatch Chairman and CEO Mike Covey will hold the same position in the new company, and Potlach President and COO Eric Cremers will continue to serve in the same position in the combined company. John Enlow, currently president and CEO of Deltic, will serve as the company’s vice chairman and will lead the integration of the two businesses.

“The complementary businesses make us a natural fit. With Deltic, we gain significant scale, particularly through nearly 1 million acres in Arkansas, as well as substantially expanded sawmill capacity,” Covey said.

Together, the combined company will have a timberland portfolio of approximately 2 million acres, with approximately 1.1 million acres in the Southern United States. It will own 600,000 acres of timberland real estate in Idaho and 150,000 acres in Minnesota. In addition, the company will operate eight manufacturing facilities for wood products. According to the companies, synergies accruing from the deal are expected to total $50 million.

The transaction is expected to close in the first half of 2018.

Read more about Potlatch’s history and evolving strategy in REIT magazine’s recent feature story.

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Published at Tue, 24 Oct 2017 13:04:26 +0000

Data Center REIT CyrusOne Investing $100 Million in Chinese Company GDS

CyrusOne Inc. (NASDAQ: CONE) said Oct. 18 that it will make a $100 million equity investment in GDS Holdings Ltd. (NASDAQ: GDS) as part of a new strategic partnership with the Chinese data center developer and operator.

Following the equity investment, CyrusOne will own approximately 8 percent of GDS. Additionally, CyrusOne President and CEO Gary Wojtaszek will join the GDS board.

In a conference call, Wojtaszek noted that CyrusOne and GDS count almost every major online cloud company in the United States and China as their customers. He stressed that the partnership fulfills the companies’ goal of developing a global data presence and creates a “compelling value proposition” for shareholders. He added that “practically all” of CyrusOne’s customers are looking to expand in China.

The strategic partnership is expected to involve the exchange of best practices around sales and marketing, data center design and construction, supply chain management, and customer relationship management and operations.

Wojtaszek said the partnership and investment with GDS will do nothing to disrupt existing plans to expand in the European market. In fact, he pointed out that GDS’s major shareholder, STT GDC, already has a strong presence in Europe. As a result, CyrusOne will now have two partners that can help it expand in Europe at a faster pace than would have been possible alone, he said.

Michael Rollins, analyst at Citi Research, said he had considered European expansion to be the priority for CyrusOne. However, “the partnership with GDS strengthens CyrusOne’s move towards becoming the key supplier and enabler of the hyper-scale cloud players both in the U.S. and abroad,” he observed.

KeyBanc Capital Markets analyst Jordan Sadler described the announcement as a “surprising strategic shift,” given that during the second quarter earnings call Wojtaszek said the company was reviewing a number of options in Europe, including a property in Dublin.

“We view the investment and the Chinese market as a potentially significant opportunity, though the risk associated with an investment in GDS remains less clear,” Sadler said.

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Published at Wed, 18 Oct 2017 18:22:35 +0000

BDO Consultant Says Industrial Repurposing an Alternative for Surplus Retail Real Estate

In the latest edition of The REIT Report: NAREIT’s Weekly Podcast, Dennis Duffy, director with BDO Consulting, discussed potential conversions of retail real estate into industrial properties.

The rise of e-commerce and spike in retail store closings in the United States have generated speculation about the future of country’s retail property inventory. REITs generally own high-quality properties, which means their portfolios are less exposed to pressures from online retail. Additionally, many REITs are adapting their properties to the changing tastes and preferences of consumers.

However, some retail property owners are considering transitioning their assets into industrial properties, according to Duffy. He noted that demand for industrial space does not appear likely to come down in the near future.

“Population growth continues in the U.S. Demand for consumer goods continues in the U.S.,” Duffy said. “Inadequate existing infrastructure also will create demand for logistics.”

Duffy also pointed out that delivery companies will need logistics facilities that are closer to their client base. Industrial space “has always been on the edge fo town,” according to Duffy.

“From the standpoint of logistics… I expect that any of the retail properties that are surplus or about to be repurposed would probably occur in high-demand areas or those best-suited to deal with the existing infrastructure,” Duffy said.

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Published at Tue, 17 Oct 2017 17:30:00 +0000

Survey Finds Executives Still Bullish on Real Estate Market

In the latest episode of The REIT Report: NAREIT’s Weekly Podcast, John Sullivan, chairman of DLA Piper’s real estate practice, discussed the results of the firm’s annual survey of real estate executives.

Sullivan said the survey showed that real estate company executives remain “generally bullish” on the commercial real estate market. The level of optimism has dropped slightly from a year earlier, according to the survey.

Regarding the ongoing transitions in retail real estate, Sullivan said the executives had a relatively positive outlook for the sector. He pointed out that more than two-thirds of survey respondents expressed confidence in the ability of retailers to adapt to changing market conditions brought on by online retail.

“There’s a lot of focus on different ways of looking at retail now,” Sullivan said, “not just as a matter of going to the mall and getting a new pair of sneakers, but creating an entire experience.”

Looking at the capital markets, Sullivan said executives are predicting that the interest of foreign investors in U.S. real estate will remain high. In addition to China, Sullivan said investors from Canada, Germany, Norway and South Korea are expected to be among the major sources of capital for U.S. real estate.

In terms of areas of concern, DLA Piper’s survey identified the slowing of the Chinese economy as one potential problem.

(Subscribe to The REIT Report via iTunes.)

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Published at Wed, 11 Oct 2017 14:52:20 +0000

REIT Fundamentals Remain Favorable, Despite September Downturn

REIT fundamentals remain favorable despite weakness in the sector’s stock performance during September, according to Brad Case, NAREIT senior vice president for research and industry information.

The total returns of the FTSE NAREIT All REITs Index dropped 0.6 percent in September, while the S&P 500 posted a total return of 2.1 percent. For the first nine months of 2017, total returns of the FTSE NAREIT All REITs Index gained 6.7 percent. The S&P 500 returned 14.2 percent through the end of September.

Case described September as a month of “mean reversion.” He explained that the strongest stock performers in September had been the weakest before that point, namely lodging and self-storage REITs. The weaker performers in September had been the strongest beforehand: infrastructure, data center and manufactured home REITs.

For the larger market as a whole, Case noted, 2017 has been a year of large disparities in performance: Large cap growth stocks have outperformed, whereas small cap value stocks have languished. Case explained that REIT market performance has traditionally been more similar to that of small cap value stocks compared to other parts of the broader stock market. During 2017, REITs moved ahead of small cap value stocks, although that gap did start to close in September, he noted.

Case also observed that REITs have been undervalued for most of 2017. “That part of the performance disparity did not close significantly during September,” he said.

Meanwhile, overall fundamentals remain healthy, according to Case. He pointed to slow but steady macroeconomic improvement and improvement in the demand conditions that tend to result in higher rent growth and occupancy levels. At the same time, supply is only increasing modestly.

“Conditions are really quite favorable for real estate investing and specifically for REITs,” Case said.

Turning to specific property sectors, Case pointed out that retail REITs began to recover in September. Retail REITs bucked the overall trend to post total returns of 0.7 percent in the month.

“The impact of e-commerce is likely to be more severely felt outside of the REIT space than in, and I think investors are starting to realize that,” Case said.

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Published at Thu, 05 Oct 2017 19:59:35 +0000