U.S. Real Estate Deals Nearly Triple in 2010

With the global economy settling after a prolonged period of uncertainty, commercial real estate mergers and acquisitions worldwide grew 23.8 percent between 2009 and 2010, according to a report.

The study, conducted by M&A research firm mergermarket, found the total value of commercial real estate deals in 2010 to be $60.1 billion, up from $48.6 billion in the year prior. Total transactions in the sector climbed from 235 to 251 during the period.

In the United States, the value of M&A activity in the real estate sector increased from $3.8 billion in 2009 to $11.0 billion last year. The number of deals that took place almost doubled, climbing from 20 to 36.

Given the financial upheaval of recent years and debt maturities looming for commercial real estate property owners, observers have speculated that M&A activity will only continue to increase going forward.

“There are signs of life in this market,” says Marty Cicco, managing partner with Evercore Partners. “Obviously, in this interest rate environment, the work-through of the residual issues that have been built up at the banks show all the signs that transaction volume will pick up a good bit.”

Mark O. Decker, Jr., director with Robert W. Baird & Co., notes that commercial real estate transactions actually fell short of expectations last year. Decker says he expects REITs to be even more active on the acquisition front in 2011 than they were in 2010.

"Listed REITs have access to capital in a highly advantaged fashion versus private market counterparts, and I think they'll continue to benefit from that," he says.

Real estate in the Asia-Pacific region also saw a rise in deal-making from 2009 to 2010. The number of major M&A transactions grew slightly from 93 to 98. However, total deal value increased from $12 billion in 2009 to $22.7 billion in 2010.

Active markets in Asia and the United States helped offset the slump in European deals. While the number of transactions that took place on the continent held steady—82 in 2010, compared with 81 in 2009—the value of those mergers and acquisitions dropped by almost a third. Commercial real estate mergers and acquisitions in Europe dropped from $24.1 billion in 2009 to $16.1 billion last year.

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U.S. Real Estate Deals Nearly Triple in 2010

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