11/17/2021 | by
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Total REIT M&A activity through the third quarter of 2021 has already surpassed levels seen in 2019 and 2020, boosted by price recovery, attractive financing, and renewed pressure from activist investors, says Blake Liggio, partner in the real estate industry group of global law firm Goodwin.

“Pricing for deals has improved coming out of the pricing troughs that we saw in many sectors during the pandemic… over the last two years it has been more challenging for boards to justify a sale of the company,” Liggio said. The current pace of deal volume, supported by low interest rates and attractive financing, is likely to remain intact through the end of the year, he added.

The industrial, self-storage, data centers, multifamily, and life science sectors continued to see M&A activity from the end of 2019 and largely throughout 2020, Liggio said. In 2021, other sectors such as retail and office, have regained activity or begun to think about entering into a transactional strategic review.

Meanwhile, the presence of Blackstone in the real estate sector, most recently with the privatization of QTS Realty Corp., continues to support deal activity in the industry. In fact, privatization transactions are at their highest levels since 2007, Liggio said, and the presence of Blackstone means that companies will continue to think about going private.

Liggio also commented on the impact of activists on M&A activity. He said activism has regained momentum in 2021. “As pricing has improved and management teams and boards can no longer necessarily point to a pandemic recession as a reason for lower returns, activists have returned to the table offering solutions to lagging aspects of various real estate companies,” he said.