In a transfer that wakened the usually “staid” internet lease actual property sector, REIT STORE Capital Corp. is being acquired by a partnership between world institutional investor GIC and Oak Avenue, a division of internet lease investor Blue Owl, in an all-cash deal value $14 billion, GlobeSt.com reported Thursday.
Trade followers stated that this represents a “monster” transaction within the internet lease sector that gives substantial further scale to one of many largest current gamers in Oak Avenue and a comparatively new internet lease investor in GIC.
Jeff Cox, Stan Johnson Firm managing accomplice, tells GlobeSt.com that given the challenges of rising capital prices and potential financial headwinds, “it is sensible that events concerned would pursue this relationship. It additionally means that internet lease product stays in excessive demand and continues to develop as a well-liked asset class amongst traders.”
Would Make It Third-Largest REIT
Scott Merkle, managing accomplice for SLB Capital Advisors, an actual property advisory specializing in sale-leasebacks, tells GlobeSt.com that “within the usually staid internet lease actual property world, this can be a monster transaction” that, if consummated, will consequence within the take-private of the third largest publicly traded internet lease REIT.
“GIC and Oak Avenue are buying one of the crucial prolific sale-leaseback traders that commonly deploys properly north of $1 billion a 12 months.”
As one of many largest sovereign wealth funds on the planet, Singaporean-based GIC has been significantly energetic in U.S. actual property.
The STORE transaction represents GIC’s second funding within the U.S. internet lease sector following the formation in 2021 of a brand new internet lease retail actual property platform with RPT Realty.
Oak Avenue, which had $16.6 billion in AUM as of June 30, 2022, has continued its speedy progress within the sale-leaseback enviornment, which has been bolstered by its acquisition by Blue Owl in 2021
This 12 months’s Q2 registered the strongest Q2 interval sale-leaseback efficiency in each deal rely (236 discrete transactions) and deal quantity ($10.2bn) since SLB Capital Advisors started monitoring the market.
“Whereas sale-leasebacks aren’t resistant to broader market choppiness, it continues to be an excellent time for company homeowners of actual property to think about monetizing owned services,” Merkle stated.
Deal a Bit ‘Surprising’
David Auerbach, managing director at Armada ETF Advisors; says that the transaction highlights the demand for internet lease properties as traders search yield within the REIT house.
“With so many internet lease gamers, I’d not have anticipated STORE to be the primary one acquired, however the transfer is important since STORE is an S&P MidCap 400 constituent and follows on the heels of the O/VER merger again in November of final 12 months.
“The transaction is important as two of the most important gamers in personal fairness/sovereign wealth funds are partnering on the transaction and diversifying each events’ portfolios into fascinating internet lease belongings.”
Colleague Al Otero, portfolio supervisor at Armada ETF Advisors, notes that “It’s good to see a big actual property transaction come again into {the marketplace} as exercise has slowed precipitously because the Federal Reserve began elevating rates of interest earlier within the 12 months.
“The willingness of refined traders to step again into the market right now is a testomony to the working platform, underwriting prowess and asset high quality that has been established at Retailer Capital since its inception.”
