Strategic dynamics driving public/private real estate markets.
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M&A and Strategic Transactions Monitor
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The M&A and Strategic Transactions Monitor reveals the top themes in both public and private markets through year-end 2024 and forecasts for 2025.
Strong 2024 returns have led to several REIT sectors trading at a premium to NAV, implying a strong cost of capital signal.
As a result of the favorable valuations, REITs are shoring up capital to go on offense, and acquisition forecasts point to a busy 2025.
In addition, valuation declines have appeared to bottom for both public and private real estate. REIT nominal cap rate expansion has plateaued, providing further evidence of attractive entry point for the capital on the sidelines.
Redemption queues for ODCE funds, who have been cautious throughout the period of heightened interest rate environment, have started to lessen in the most recent quarter, after peaking at 19% of NAV.
Valuation spreads between top and bottom performing REITs has grown, presenting pricing arbitrage opportunities and potentially catalyzing increased M&A activity in 2025.
With interest rates generally trending downward, debt markets are poised to remain open and active for 2025.
Office REITs are the among top performing sectors in 2024 and have benefited from consistently strong fundamentals despite a barrage of negative sector headlines.