United States

Real estate M&A activity heats up


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According to the Mergers & Acquisitions Mid-Market Pulse (MMP), nearly 70 percent of investment bankers expect more deals to be completed in the financial services, insurance and real estate (FIRE) sector by November 2015 than were completed in November 2014. One of the main reasons the investment community is so bullish on FIRE deals is because real estate has become very hot. Investors are putting more money into real estate funds than they have since the property bust in 2008. The interest in real estate is somewhat simple: Private equity real estate funds are putting up the big returns.

With strong returns and so much capital raised in the sector, there's no surprise that there is plenty of M&A activity. There has been a substantial increase in capital flowing into both the private and public markets, and investors are highly transactional right now. The low interest rate environment, coupled with the influx of capital, has made investors very active.

Going forward, there are a few factors on the horizon that could impact the real estate sector, including more sovereign wealth funds (SWF) and international high net worth individuals trying to get in the action. An increase in interest rates may also change the dynamics for dealmaking in the real estate sector, although a gradually rising interest rate will still be quite attractive and shouldn't have a significant impact on M&A activity.


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