Real estate has historically shown resilience during challenging economic periods and is considered a reliable hedge against inflation—but not all assets are created equal, and dealmakers were highly selective in the transactions they pursued in 2022
US$100.9 billion
The value of 91 transactions in the US real estate sector in 2022
3%
Percentage increase in deal volume compared to 2021
Real estate ascended the M&A ranks in 2022, becoming the fifth-highest sector by value. This is a big move up from the year before and is due primarily to a spate of large deals that closed in the first half of the year, before a material softening in the market. Indeed, of the top-ten biggest real estate deals made in the year, just two fell in the second half.
All told, there were 91 transactions—a 3 percent increase compared with the 88 deals in 2021, making it the highest year for the sector, by volume, on Mergermarket record. Value came to US$100.9 billion, a 17 percent drop year-on-year, but again, the total was topped only in 2021 and 2006.
Prologis, a real estate investment trust (REIT) that invests in logistics facilities, sealed the largest acquisition with its US$22.8 billion takeover of fellow warehouse-focused REIT Duke Realty. The central role that logistics assets play in global commerce makes them hot properties, and they outperformed during the pandemic. Prologis was able to fund the all-stock deal by issuing new equity at a share price well above its pre-pandemic level.
In a similarly selective deal, Singaporean sovereign wealth fund GIC and Oak Street Real Estate Capital together bought STORE Capital for US$13.8 billion. The REIT specializes in single-tenant, triple net leased properties, which are generally considered to offer lower-risk returns. STORE's properties are generally leased to tenants with strong credit.
Blackstone claimed the sector's third-biggest deal when it acquired American Campus Communities (ACC) for US$13.1 billion. ACC is the largest owner, manager and developer of student housing communities in the US, its portfolio comprising 166 properties in 71 university markets.
High interest rates are having a pronounced impact on the real estate investment market. As yield-bearing assets, the higher cost of debt is forcing acquirers to push harder on entry prices and, in many cases, sellers are unwilling to accept these discounts. The sharp slowdown in activity in the second half of 2022 is likely to persist until the expectations of sellers and the aspirations of buyers are better aligned.
Top real estate deals 2022
- Prologis announced the US$22.8 billion acquisition of Duke Realty
- GIC Private Limited and Oak Street Real Estate Capital together agreed to buy STORE Capital for US$13.8 billion
- American Campus Communities, Inc. was acquired by Blackstone for US$13.1 billion
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