Strong M&A activity predicted for specialist real estate firms

Further consolidation in the real estate investment management industry should be expected this year, driven in part by some of the largest firms acquiring smaller specialists, according to capital advisory firm Hodes Weill.

Although COVID-19 restrictions have weighed on M&A activity, three companies that have a strong presence in industrial and logistics real estate have been acquired in recent months: M7 Real Estate, Exeter Property Group and Tritax Management. In a report published this week, Hodes Weill has predicted that this trend will continue “as large cap managers target specialists to access new products, sectors and markets”.

Companies with presence and expertise in logistics real estate are likely to be the most coveted. In January, Oxford Properties, owned by Canadian pension fund OMERS, confirmed its acquisition of fund manager M7 Real Estate as part of plans to invest £3bn (€3.48bn) in European industrial markets.

David Hodes, co-founder of Hodes Weill, said the Oxford-M7 tie-up – along with the merger of EQT and Exeter, and the 60% buyout of Tritax by Aberdeen Standard Investments – were “prime examples of large cap managers targeting sector specialists to access new sectors and to enhance their geographic reach”.

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