“The pandemic narrowed the focus to opportunities in some sought-after real estate sectors, while at the same time other sectors suffered significant disruption to business models,” says Raj Somchand, head of M&A and Equity Advisory for EMEA at JLL. “But we’re quickly moving on from that.”
Among recent deals, the world’s third-largest listed real estate investment manager is being created with US$129 billion of assets under management, as Hong Kong-headquartered ESR Cayman buys real estate fund manager ARA Asset Management.
In Germany, Europe’s largest real estate merger recently saw Vonovia takeover Deutsche Wohnen for around €19 billion (US$22.1 billion), bringing two major residential specialists together.
Increased M&A activity in the real estate world is mirrored by a rise in deal-making across all industries, with volumes already close to their all-time US$4.8 trillion high, having so far surpassed $4.3 trillion this year, according to Refinitiv data.
Sector expertise
Recent deals have shown that companies are looking beyond just owning real estate assets. They’re also looking for operating platforms and management that can help them navigate and make inroads in new sectors.
“Gaining access to best-in-class, proven management platforms is equally as important as portfolio and AUM expansion,” he says. “There’s a growing realization that real estate is no longer a collection of assets, and there’s a business that sits behind it.”
It’s increasingly the case in less established real estate sectors. In June, global asset manager Brookfield acquired Arlington, a UK science, innovation, and technology real estate platform for £714 million (US$996 million), from TPG Real Estate Partners. In 2020, AXA IM Real Assets took over pan-European science park operator, Kadans Science Partner.
“The likes of life sciences and data centres have come further into view during the pandemic,” he says. “They’re sectors where there’s a greater operating component to them and therefore they’re more suited to M&A. There’s a clear need for expertise able to safely guide capital, particularly in those more nascent sectors.”
