Real estate M&A enjoyed an excellent 2012, and the pace quickened in the first quarter of this year. Deals of $100 million or more increased by 13 percent on an annualized basis over last year, the sector’s best since at least 2000 in deal volume, according to Dealogic. The $36 billion in dollar volume of the first quarter activity was a 70 percent increase over last year, and if it persists, 2013 will be the first year with more than $100 billion in U.S. real estate M&A activity since 2007. More than a quarter of the first quarter activity by dollar volume came on American Realty Capital Properties Inc.’s $9.7 billion bid for Cole Credit Property Trust III Inc. in March. American Realty dropped the offer on April 11. Below, we list the advisers on three real estate transactions of $1 billion or more announced in January.
Spirit Realty Capital Inc./Cole Credit Property Trust II
Spirit Realty Capital Inc. and Cole Credit Property Trust II agreed to combine on January 22 in a deal that places a combined value of $7.1 billion on the two companies, both of which are commercial REITs. The combined entity will retain Spirit Realty’s name and management, though Cole shareholders will own 56 percent of the new company. The deal will be a backdoor initial public offering for Cole, whose stock is not publicly traded.
Spirit shareholders will receive 1.9 Cole shares for each Spirit share, consideration worth about $17.95 when the deal was announced. The companies hope to close the deal in the third quarter pending approvals from regulators and both sets of shareholders.
For acquiror Spirit Realty Capital Inc.
Latham & Watkins: Bradley Helms, Julian Kleindorfer, and Charles Ruck.
For target Cole Credit Property Trust II (Phoenix)
Goodwin Procter: Mark Kirshenbaum, Suzanne Lecaroz, and Gilbert Menna.
For Cole special committee
Ropes & Gray: John Loder, Amanda McGrady Morrison, and Peter Welsh.
Starwood / LNR
Corporate affiliates Starwood Property Trust Inc. and Starwood Capital Group Global L.L.C. agreed to buy LNR Property LLC from its private equity owners for $1.05 billion on January 24. LNR is a leading player in the market for distressed commercial properties. The parties hope to close the deal in the second quarter pending regulatory approvals.
For buyers Starwood Property Trust Inc. and Starwood Capital Group Global L.L.C. (Greenwich, Connecticut)
Sidley Austin: Jonathan Babb, Scott Freeman, and Michael Gordon.
For the board of LNR Property LLC (Miami Beach) and sellers Aozora Bank Ltd. (Tokyo), Cerberus Capital Management L.P. (New York), iStar Financial Inc. (New York), Oaktree Capital Management L.P. (Los Angeles), and Vornado Realty Trust (New York)
Sullivan & Cromwell: Matthew
Frie­stedt, S. Neal McKnight, and Alan Sinsheimer.
For target LNR Property and Cerberus Capital Management
Schulte, Roth & Zabel: John Pollack and Alan Waldenberg.
Annaly / Crexus
Annaly Capital Management Inc. agreed to buy Crexus Investment Corporation on January 31 in a deal that values the target at $1.05 billion. Annaly founded Crexus and took it public four years ago and still owns 12.4 percent of the company. Crexus invests in commercial mortgages, while Annaly has in recent years sought to diversify its business from a focus on government-backed mortgage bonds.
Crexus shareholders stand to receive $13 per share in the deal, a 17 percent premium over the company’s closing price on November 9, the last trading day before Annaly said it would seek to buy the company. At press time the parties hoped to close the deal in April pending approvals from regulators and Crexus shareholders. Annaly is privately held.
For acquiror Annaly Capital Management Inc. (New York)
K&L Gates: David Bernstein, Phillip Kardis II, and Thomas Lyden.
For target Crexus Investment
Corporation (New York)
Goodwin Procter: John Haggerty,
Yoel Kranz, and Gilbert Menna.