As most of you know already the stronger company’s are starting to eat the weak–I guess with interest rate where are where they are this shouldn’t be much of a surprise–it is hard to make money if you have to refinance your debt at super higher interest rates.
Lodging REIT Hersha Hospitality (HT) is being acquired by KSL Capital, a private equity firm targeting leisure and hospitality. The acquisition price is $10/share – a nice premium over the closing price last week of $6.28. HT has 3 preferred issues outstanding and all 3 are to be redeemed–a nice gain for holders as issues were trading around $20/share prior to the announcement.
Also Kimco Realty (KIM) , a REIT owning open air malls, announced the pending acquisition of RPT Realty (RPT) which also owns open air malls. Again KIM is much larger and stronger than RPT which should keep the cost of capital favorable – at least relative to many smaller weaker company’s. RPT has a $50/share convertible preferred outstanding which is sounds like will remain outstanding.
I would expect we will see quite a few more acquisitions in the coming year–some will be forced of course, because of poor financials. Look to see quite a few deals in the banking space.
Yesterday equities moved relatively strongly higher–while today the indexes are essentially treading water—off less than 1/10%. Interest rates are up 1 basis points from the close yesterday–really just treading water awaiting the inflation number on Thursday (PCE) and employment report on Friday. We could see quiet markets for a couple of days, which I always welcome.