Real estate owner CBRE Investment Management said it has agreed to buy a global portfolio of logistics properties valued at $4.9 billion, representing one of the largest sales ever of industrial property.
The properties were built or are being developed by Ross Perot Jr.’s Hillwood Investment Properties, a real-estate business founded by the son of businessman and presidential candidate Ross Perot Sr. The portfolio includes more than 28 million square feet of warehouses, distribution centers and other logistics facilities in the U.S., U.K., Germany and Poland.
Industrial property was one of the best-performing property types in 2021 and has been for the past few years. CBRE’s acquisition would be the latest bet by a large investor on the transformation of the supply chain by e-commerce and the pandemic.
The pandemic accelerated these changes as many consumers avoided stores fearing possible infection.
“It’s made the price of real estate close to the consumer to be more worth it,” said Chuck Leitner, chief executive of CBRE Investment.
CBRE Investment, a unit of commercial-real-estate services firm CBRE Group Inc., found the Hillwood portfolio attractive because most of it was built in markets with large labor forces, advanced transportation systems and proximity to large numbers of consumers, Mr. Leitner said.
Big tenants like Amazon.com Inc., Walmart Inc. and Home Depot Inc. like such features. “It’s a portfolio that was built and designed to be very responsive” to online retailers, Mr. Leitner said.
Hillwood’s European properties were particularly attractive to the firm because “the penetration rate of e-commerce is just getting started there relative to the U.S.,” Mr. Leitner said.
About two-thirds of the Hillwood portfolio is built and leased. About one-third is still being leased or is under development, Mr. Leitner said.
CBRE Investment, which has over $133 billion in assets including $35 billion of global industrial property, won the bidding for the Hillwood portfolio partly because of parent CBRE Group’s strong balance sheet. “That allowed us to move quickly,” Mr. Leitner said.
Hilwood’s sale of the industrial portfolio will close in stages starting this year and possibly stretching into 2023, Mr. Leitner said.
Ross Perot Sr. founded Electronic Data Systems in 1962 and sold that company to General Motors Co. in 1984. A candidate for president in 1992 and 1996, he also invested in numerous other businesses including real estate. Ross Perot Jr. is chairman of Hillwood Investment Properties.
Evergrande Is Told to Tear Down 39 Buildings on Man-Made Island
Figures also show a steep drop in apartment sales by the developer, which can appeal the tear-down order
The crisis engulfing China Evergrande Group EGRNF -3.97% deepened, as the embattled property developer said it had been ordered to tear down dozens of buildings on an extravagant man-made island in southern China.
At the same time, Evergrande released data showing its much-publicized financial stress had largely halted sales of new homes, depriving it of an important source of cash. Contracted sales dwindled to about 720 million yuan, the equivalent of just $113 million, between mid-October and year-end, the company’s figures showed.
The buildings were part of an ambitious project known as “Ocean Flower Island,” an artificial archipelago that the developer has compared to Dubai’s Palm Jumeirah. The Ocean Flower development encompasses houses, hotels and other features, including a roughly 1.1 million square foot convention center built to resemble giant blooming peonies.
In a statement Tuesday, Evergrande confirmed the order to demolish 39 buildings. The notice, issued by local authorities in the island province of Hainan along China’s southern coast, had previously circulated on social media and been covered by Chinese media.
Authorities in Danzhou, a city in Hainan, ordered a subsidiary of Evergrande to demolish the cluster of buildings, according to a notice dated Dec. 30. The notice said the developer had illegally obtained permits and ordered it to knock down the buildings within 10 days or face a forced demolition. Evergrande has 60 days to file a potential appeal.
“The company will actively communicate with the authority in accordance with the guidance of the decision letter and resolve the issue properly,” Evergrande said in a stock-exchange filing. It stressed that the decision only applied to a single plot on one of the islets that makes up the Ocean Flower archipelago.
Danzhou’s government said in a report last month that Ocean Flower Island had harmed the marine environment, partly by causing mass damage to coral reefs. The city previously ordered construction and presales of the 39 buildings to stop in May 2020, according to a Dec. 27 statement.
Evergrande, which had amassed roughly $300 billion in liabilities as of June 30, has been struggling to meet its obligations since the summer, and to finish building homes that it has presold to many home buyers.
It has missed several interest payments on U.S. dollar bonds, including some that were due in December, and has been declared in default by major credit-rating companies.
Evergrande said Tuesday its contracted sales totaled the equivalent of $69.7 billion in 2021, a near-39% drop from a year earlier, and far below its full-year target. Contracted sales, which reflect new contracts signed with home buyers, are a widely watched industry measure.
Evergrande’s shares, which had been halted Monday ahead of the company’s statement, rose 1.3% on Tuesday after trading resumed, to 1.61 Hong Kong dollars per share, or the equivalent of $0.13. The stock had fallen 89% last year.
Existing vaccines effective against severe Omicron, study suggests
Findings could help health authorities decide whether switch to variant-targeted jabs is necessary
Cellular immunity elicited by the BioNTech/Pfizer and Johnson & Johnson Covid-19 vaccines is effective against the Omicron coronavirus variant, according to a study, suggesting vaccines will protect against severe disease even if the antibody responses against the strain are not as strong or durable.
The findings, contained in a new Harvard medical school study, add to evidence that the current vaccines hold up against severe Covid outcomes, and could help health authorities to decide whether to switch to Omicron-targeted jabs.
“These data suggest that current vaccines may provide considerable protection against severe disease with the Sars-Cov-2 Omicron variant despite the substantial reduction of neutralising antibody responses,” the researchers wrote in the study made public on Monday. The paper has not been peer-reviewed yet.
Previous evidence suggests that the existing vaccines lose antibody power when pitted against Omicron, meaning individuals are likely to get infected and develop mild disease when they come into contact with the virus.
A third shot at least partially restores that antibody protection, and countries have been racing to scale up their booster programmes to avoid new restrictions. But vaccines are still expected to protect against severe disease, and health authorities have said they would closely examine evidence such as the one contained in the Monday study to decide whether a switch to Omicron-targeted vaccines is necessary.
Cellular immunity is a different part of the immune response that tends to last longer than antibodies.
While manufacturing projections for 2022 indicate supply will keep up with demand in most scenarios if the world continues to use the shots available at present, switching to Omicron-targeted vaccines could see a global supply squeeze.
Healthcare analytics company Airfinity has estimated — in a best-case scenario — that if all drugmakers switched production and scaled up quickly, 6bn Omicron-targeted shots would be available by October 2022. If drugmakers were to switch half of their production and continued to make both versions, that target would not be reached before January next year.
Health authorities sounded the alarm on the highly mutated Omicron variant late last year, saying it was able to pierce through immunity afforded by previous vaccines or infection, but scientists have been hopeful widely used shots could still protect from severe disease.
Early findings suggest Omicron appears to be milder than previous variants, but it is not clear yet if this is because of the variant itself, or because most of the world has either been infected or vaccinated, or a combination of the two factors.
However, scientists have said that its high transmissibility, coupled with uneven vaccine coverage, could still mean health systems worldwide come under pressure as many more people get infected.
The World Health Organization has repeatedly called for more equitable distribution of vaccines. It set a target of 70 per cent coverage in all nations by mid-2022 after about half of its member states were unable to hit the 40 per cent milestone in 2021. The health body said the failure to meet targets was largely due to severe undersupply.
Gapping down
In reaction to earnings/guidance:
- ICAD -5.7% (sees Q4 revs below consensus)
Other news:
- AVRO -13.4% (is shifting its portfolio priorities to focus on other clinical-stage programs and extending its cash runway into the first quarter of 2024)
- CNM -8.4% (stock offering)
- SE -6.9% (will hold its annual general meeting of shareholders on February 14; proposal will be submitted to the AGM for shareholders to approve as a special resolution)
- AFCG -5.4% (launches 3 mln share public offering)
- WMG -4% (announces sale of 8.56 mln shares by Access Industries)
- SBTX -2.1% (files for $250 mln mixed securities shelf offering)
Analyst comments:
- FL -4.2% (downgraded to Underweight from Neutral at JP Morgan)
- TROW -2.6% (downgraded to Sell from Neutral at Goldman)
- PINS -2.4% (downgraded to Neutral from Buy at Guggenheim)
- SLQT -1.8% (downgraded to In-line from Outperform at Evercore ISI)
- APAM -1.5% (downgraded to Neutral from Buy at Goldman)
- AQUA -1.5% (downgraded to Mkt Perform from Outperform at Raymond James)
- BLL -1.3% (downgraded to Neutral from Buy at Citigroup)
- STNE -1.2% (downgraded to Neutral from Buy at UBS),
Gapping up
In reaction to earnings/guidance:
- NEX +8.3% (guides Q4 revs and adjusted EBITDA above consensus)
- WEX +2% (announces raised guidance for Q4 and CFO resignation)
M&A news:
- PNM +1.9% (PNM merger agreement with AGR extended)
- WAB +1.7% (announced it recently acquired the railway friction business from MASU),
Other news:
- CGEM +15.5% (granted Breakthrough Therapy Designation for CLN-0810)
- AGFY +13.9% (signed a definitive agreement for its largest Agrify Total Turn-Key Solution partnership to date with Gold Leaf Florida LLC)
- LQDA +10.3% (names new CEO)
- MRSN +7.1% (Bain Capital increases passive stake to 7.3% (prior ~5.1%))
- HUMA +5.4% (announces presentation of first preclinical results of the HAV in Coronary Artery Bypass Grafting at Advanced Therapies Week Conference)
- SHCR +3.6% (appoints new COO)
- WBX +3.5% (introduces Quasar 2 solution)
- TCRR +3% (entered into a strategic research collaboration and non-exclusive license agreement focused on the further development of a defined set of allogeneic TRuC-T cell therapies with Arbor Biotech)
- WKEY +2.9% (to invest up to $10 mln to perform Bitcoin mining)
- CAN +2.5% (entered into strategic collaboration agreements with multiple crypto mining firms for joint-mining business in Kazakhstan)
- GRTS +2.5% (reports positive clinical results from first cohort of a phase 1 study evaluating a t cell-enhanced self-amplifying mRNA (samRNA) vaccine against COVID-19)
- ENZ +2.2% (entered into a cooperation agreement with Bradley L. Radoff and certain affiliated entities)
- F +2% (planning to nearly double production capacity of the all-electric F-150 Lightning pickup to 150,000 vehicles per year at the Rouge Electric Vehicle Center in Dearborn, Michigan, to meet soaring customer demand),
Analyst comments:
- CLNE +4.1% (upgraded to Mkt Perform from Underperform at Raymond James)
- UAA +3.3% (upgraded to Outperform from Neutral at Robert W. Baird)
- FSLR +2.8% (upgraded to Mkt Perform from Underperform at Raymond James)
- HPE +2.3% (upgraded to Overweight from Equal Weight at Barclays)
- RIOT +2.2% (initiated with an Overweight at Cantor Fitzgerald),
Early premarket gappers
- Gapping up:
- LQDA +10.3%, MRSN +7.3%, MARA +2.3%, CAN +2.3%, ENZ +2.2%, NEX +2.1%, F +1.6%, HRTG +1.5%, WKEY +1.5%, GRAB +1.1%, CARR +1%,
- Gapping down:
- CNM -8.4%, SE -6.6%, AFCG -5.4%, WMG -4%, SBTX -2.1%,
US group to acquire majority stake in Africa’s biggest data centre operator Teraco
Deal with Digital Realty values Johannesburg-based company at $3.5bn
Africa’s biggest independent data centre builder is being bought by a US operator in a deal valuing the company at $3.5bn, as global investors race to take advantage of the explosive growth of internet use on the continent.
New York-listed Digital Realty will acquire a 55 per cent stake in South Africa’s Teraco, which operates some of the continent’s biggest “carrier neutral” data centres in Johannesburg, Cape Town and Durban, the companies said.
Teraco’s previous owners, including private equity groups Permira and Berkshire Partners, will remain minority shareholders.
The deal is the biggest yet in one of the world’s last major untapped internet markets, where demand for connectivity and data is surging among hundreds of millions of new phone users.
Teraco, founded in 2008, is at the centre of this boom, with tech giants and cloud computing providers seeking greater “co-location” in Africa, allowing them to house content in data centres closer to users and increase service speeds.
“This highly strategic transaction immediately cements Digital Realty as the leading co-location provider in Africa, a region experiencing rapid digital transformation . . . Teraco is the industry leader in South Africa and the continent’s connectivity hub,” said A William Stein, Digital Realty’s chief executive.
Teraco at present operates data centres with a power load of 75 megawatts, but has a total planned capacity of nearly 190MW and is constructing major new facilities.
The deal will “create a truly global, scaled platform serving our customers in Africa and beyond” and will “capitalise on the favourable industry trends and tremendous market opportunity”, said Jan Hnizdo, Teraco’s chief executive.
In the next few years, African data centre operators are also set to benefit from the completion of major subsea internet cables that are being financed by Google, Facebook’s parent Meta and other investors.
Teraco also operates NAPAfrica, the continent’s biggest internet exchange point that connects hundreds of telecoms and content providers and that has been a barometer of surging internet activity in Africa.
In 2021, NAPAfrica’s peak traffic breached two terabits a second for the first time, having hit one terabit a second just before the pandemic, a milestone it took eight years to reach.
“Over the last seven years, Teraco has transformed itself into one of the most unique data centre platforms globally,” said Pierre Pozzo, principal at Permira. The company’s organic earnings have grown nearly 20 times since Permira’s investment in 2015, he added.
Barely 1 per cent of the world’s data centre capacity is in Africa, where demand far outstrips supply. Outside South Africa, Nigeria and Ghana are also fast-growing markets for this infrastructure.
In December Equinix, a US data centre builder, announced a deal worth $320m to buy MainOne, a major west African operator founded in 2010.