THE WOODLANDS, TEXAS — Sterling Construction Co., a general contractor based in the Houston area, has entered into an agreement to acquire Georgia-based specialty contractor Plateau Excavation Inc. for $400 million. The sales price includes $375 million in cash and $25 million in Sterling’s common stock and seller notes. The deal is expected to close near the end of the third quarter. Plateau had revenues of approximately $290 million in 2018.
OMAHA, NEB. — CIT Group Inc. has agreed to acquire Mutual of Omaha’s savings bank subsidiary, Mutual of Omaha Bank, for $1 billion. CIT’s banking subsidiary, CIT Bank NA, will be used for the acquisition. The purchase price will be comprised primarily of cash and up to $150 million of CIT common stock. The transaction will diversify and enhance CIT’s funding profile with stable, lower-cost deposits from Mutual of Omaha Bank’s homeowner’s association banking business, according to New York City-based CIT. It is also expected to extend CIT’s commercial banking capabilities and enhance profitability. The transaction is expected to close in the first quarter of 2020. The agreement excludes Mutual’s mortgage subsidiary, Synergy One Lending. Founded in 1909, Mutual of Omaha offers a variety of insurance and financial products for individuals, businesses and groups throughout the United States. CIT Group Inc. (NYSE: CIT) is a financial holding company with approximately $50 billion in assets as of June 30.
Rising materials costs and the shortage of skilled workers continue to pose a challenge for general contractors. In turn, these conditions have enabled subcontractors to be highly selective about the projects they are willing to accept. “For the first time in many years, we have found ourselves encountering subcontractors who have passed up on project opportunities because the reality is that resources within qualified subcontracting firmsare finite as well,” says Anthony Johnson, executive vice president and industrial business unit leader with Chicago-based Clayco. Given this reality, contractors are relying on existing relationships with subcontractors and spending more time on pre-construction phases with developers in order to manage costs. “The most important thing we can do in this landscape is communicate with clients and manage expectations,” says Chuck Taylor, director of operations with Lemont, Illinois-based Englewood Construction. “For example, we make it clear how important timing is and that pricing could change from what we originally estimate if there’s a significant delay in a project due to design revisions or financing.” Englewood specializes in the construction of retail and restaurant properties. Most subcontractors that the firm works with are currently charging what Taylor describes as high rates and are operating at …
DENVER AND NEW YORK CITY — UDR Inc. (NYSE: UDR), a multifamily REIT based in Denver, has struck an agreement with its joint venture partner MetLife Investment Management to swap their interests in a national multifamily portfolio in a deal valued at nearly $1.8 billion. As part of the agreement, UDR will buy out MetLife’s stake in 10 apartment communities, one property under construction and four development land sites that are collectively valued at $1.1 billion. The 10 properties total 3,321 units and include Strata in San Diego; Crescent Falls Church in Falls Church, Va.; Charles River Landing, Lodge at Ames Pond and Lenox Farms in metro Boston; Towson Promenade in Towson, Md.; and the 1,513-unit, four-property Vitruvian Park campus in Addison, Texas. The assets have an average age of eight years and 95.7 percent occupancy at the time of this announcement. “The acquired communities are primarily located in markets targeted for expansion, are immediately accretive to our earnings, have operational upside and improve the diversification of our portfolio,” says Tom Toomey, chairman and CEO of UDR. Also as part of the agreement, MetLife Investment Management will purchase UDR’s stake in five apartment communities valued at a combined $645 million. …
LOUISVILLE, KY. — Pizza Hut will close as many as 500 dine-in stores over the next 24 months as part of a broader strategy to bolster its delivery and carryout services, company executives said during the second-quarter earnings call. Food Business News first reported the announcement. Pizza Hut, which is owned by Louisville, Ky.-based YUM! Brands (NYSE: YUM), operates about 7,500 locations across the United States and 18,000 worldwide. In the United States, roughly 6,100 of the company’s locations are dine-in restaurants. The remaining locations are express units, which feature limited menus and minimal to no in-store seating to prioritize delivery and takeout services. All shuttered stores will be dine-in locations. “We plan to accelerate the transition of our Pizza Hut assets to a more modern delivery carryout and delivery asset base,” YUM! Brands CEO Greg Creed said on the call. “We are excited about collaborating with franchisees who have a growth mindset to accelerate the closure of underperforming dining stores and replacement with new delivery or fast-casual delivery assets.” YUM! Brands owns Pizza Hut and several other restaurant chains, including Kentucky Fried Chicken, Taco Bell and Wingstreet. Pizza Hut express units sometimes share building space with these concepts. All …
IRVINE, CALIF. — Steadfast Apartment REIT (STAR), Steadfast Income REIT (SIR) and Steadfast Apartment REIT III (STAR III) have entered into definitive merger agreements in which STAR will acquire SIR and STAR III in separate stock-for-stock, tax-free transactions. The merger will create a combined company with approximately $3.3 billion in gross real estate assets. The transactions are expected to close in the first quarter of 2020, subject to certain closing conditions, including the approval of the respective mergers by SIR and STAR III stockholders. The merger transactions are expected to close concurrently, but are not conditioned on the consummation of each other. The merger agreements were negotiated on behalf of STAR, SIR and STAR III by their respective special committees, each of which is composed exclusively of independent directors, along with each special committee’s independent financial and legal advisors. “We believe the strategic merger of these three highly complementary portfolios with similar investment strategies will create an enhanced and diversified portfolio, concentrated in high-growth markets,” said Rodney Emery, chairman of STAR, SIR and STAR III. “The enhanced size, scale and prominence of the combined portfolio will greatly improve the company’s access to attractive capital sources, which can be used to …
BOCA RATON, FLA. — Luxury movie theater company IPIC Entertainment (Nasdaq: IPIC) has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court District of Delaware where it will seek approval of either a sale or financial reorganization plan. In July, the company missed a $10 million interest payment to Retirement System of Alabama (RSA) and notified investors that it might have to file for bankruptcy. IPIC borrowed $204 million from RSA, according to media reports. Hamid Hashemi, founder and CEO of IPIC, says that the company’s movie theaters will remain open and its employees and vendors are being paid. Hashemi notes that issues stemming from IPIC’s expansion plans for building 25 locations in four to five years are the principal culprit behind their missed payment to RSA. “Delays in development cycle combined with the high cost of capital depleted IPIC’s available resources before the company was able to reach critical mass and become self-funded,” says Hashemi. “Importantly, delays related to the Delray Beach location, resulted in unforeseen costs and a significant slowdown in circuit-wide development and new grand openings.” The Boca Raton-based company operates 16 dine-in theaters in nine states with plans to open locations in four more states, including …
Miami-Dade continues to be propelled by persistent economic growth, bustling port activity, positive investor sentiment and strong leasing, creating a perfect recipe for industrial demand. Following its most successful year ever in 2018, PortMiami broke records yet again in first-quarter 2019, recording its highest ever monthly cargo activity amount in January with a total of 104,183 twenty-foot equivalents (TEUs) of containerized cargo, a 17 percent increase over January 2018. Meanwhile, a $437.5 million expansion project, the largest ever, is planned for Port Everglades in nearby Broward County. The positive fundamentals reverberate throughout the overall South Florida market. Despite the differing industrial inventories of each South Florida market with Miami-Dade County at 186.2 million square feet, Broward County at 96.9 million square feet and Palm Beach County at 39 million square feet, demand for space across the region has fueled unprecedented development activity. Logistics, e-commerce Net industrial absorption in Miami-Dade was impressive during the first quarter, posting positive 1.2 million square feet, a notable 45 percent increase from the net absorption recorded for first-quarter 2018. Several (mostly) preleased, speculative developments contributed to the spike in net absorption. Demand trends against development indicate healthy industrial markets in Broward and Palm Beach as …
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Welltower Shakes Up Portfolio, Commits to Nearly $2.75B in Transactions
TOLEDO, OHIO — Welltower Inc. (NYSE: WELL) has expanded its senior living portfolio to the tune of 15 properties worth $949 million across the country. Simultaneously, the healthcare REIT giant exited its partnership with seniors housing operator Benchmark Senior Living, selling its 48-property portfolio to an undisclosed buyer for $1.8 billion. The 48 properties that Benchmark operates total 4,137 units and are located in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. As part of the recapitalization, Benchmark will invest in improvements at the properties. Benchmark will continue to manage the portfolio under a new management agreement with the new capital partner. Ted Flagg of the JLL Capital Markets team represented Welltower in the Benchmark transaction. With the new acquisitions, Welltower expanded its footprint by entering into or expanding partner agreements with senior living operators Balfour Senior Living, Sunrise Senior Living and Discovery Senior Living. The three partnerships yielded 14 properties in Maryland, Colorado, California and Texas. Welltower acquired six properties from Balfour, including Balfour’s flagship Balfour at Riverfront in Denver and the recently opened Lavender Farms, for $308 million. The other four properties are situated in the Denver and Boulder metro areas. Additionally, Welltower has the option to …
The 2017 tax overhaul was supposed to spur $100 billion in investments across the country through the designation of more than 8,700 areas as Opportunity Zones. Investors could reduce or postpone taxes on profit from businesses, partnerships and stocks by reinvesting in the Opportunity Zones. They could also avoid future profits from those reinvestments, provided they make substantial improvements. To get the full benefit, investors would have to buy into eligible projects by the end of 2019. To fully shelter 2018 profits from hedge funds and other partnerships, the deadline was June 29. The land rush hasn’t started. In January, only half of real estate investors surveyed by research firm Preqin were considering investing in Opportunity Zones. More than 90 percent weren’t even involved in an Opportunity Zone project at the time of the survey. The biggest reason for the hesitation is that the rules to take advantage of Opportunity Zones have only begun to be clarified. The IRS and Treasury Department haven’t released the type of detailed guidance that investors need before they are confident enough to move forward. Final regulations on the zones were delayed by the government shutdown earlier this year and have yet to be made …