It’s Big Institutional Deal Time Again Article originally posted on Globe St. on December 5, 2024 The last few years in commercial real estate have been filled with observations of all the dry powder resting on the sidelines, getting ready for action. It looks like some of that capital is getting shaken loose and put into sizable deals. November brought two examples. Blackstone Real Estate Income Trust sold a portfolio of eight multifamily properties to Brookfield Properties, a subsidiary of Brookfield Asset Management, for $845 million in November, as CoStar reported. The assets comprised 4,143 units. Four of the properties were in Las Vegas, and Nevada; one was in Phoenix, Arizona; two were in Charlotte and Chapel Hill, North Carolina; and one was in Columbus, Ohio. “This transaction represents a terrific outcome for our investors and demonstrates the strong institutional demand for well-located, quality assets,” a Blackstone spokesperson emailed GlobeSt.com. “Rental housing remains one of our highest-conviction themes, and we continue to see strong fundamentals in attractive markets.” Brookfield Asset Management recently moved its headquarters from Toronto to New York City as part of a corporate restructuring to attract a broader set of shareholders by listing shares on more stock indexes, as The Globe and Mail reported last month. Also in November, Blackstone announced its acquisition of Retail Opportunity Investments Corp. (ROIC) in a deal valued at approximately $4 billion. ROIC’s portfolio includes 93 high-quality, grocery-anchored retail properties, spanning 10.5 million square feet across prime West Coast locations such as Los Angeles, Seattle, San Francisco, and Portland. This acquisition aligns with Blackstone’s strategy to invest in necessity-based retail centers in densely populated areas. This week, Dune Real Estate and TF Cornerstone formed a $1 billion joint venture to adapt office assets into residential properties. The target metros will include New York City; Washington, DC; Boston; Atlanta; Dallas; San Francisco; Los Angeles; Charlotte; and Raleigh. And SL Green made a $130 million acquisition of 500 Park Avenue, adding to at least seven other properties on the prestigious part of Manhattan. “We are starting to see an increase in real estate transaction activity,” Allan Swaringen, president and chief executive officer of JLL Income Property Trust, told GlobeSt.com. The two recent rate cuts by the Fed “have signaled a more accommodative policy, helping to move capital off the sidelines.” Swaringen also said, “Large institutional investors — as well as the private wealth markets — have responded with increased capital flows to the asset class to take advantage of early market cycle opportunities to invest at attractive point-forward valuations.” The firm had “continued to invest in moderation” through the downturn. However, with pricing seeming at a bottom, they “have an investment pipeline that exceeds $200 million.” “We’re seeing strong demand for large-scale student housing portfolios, especially near major campuses with growing enrollment in fields like healthcare, technology, and business,” J.J. Smith, executive vice president and partner in residential at CRG, told GlobeSt.com. Additionally, Jahn Brodwin, a senior managing director at FTI Consulting, offered a few thoughts on the recent activity. Ongoing increase of additional capital; Growing confidence that “we are bounding around the bottom on valuations”; Greater clarity of interest rate direction; Some momentum in return to office; Sellers are unable to hold off because of fund liquidations and loan maturities; and Greater inventories of distressed debt. This hasn’t only been a recent shift in markets. The big money started to move by fall 2023 but clearly has needed more time than it might have seemed at the time.