Office sales volumes have shown clear signs of a rebound, but investors are still heavily focused on term and credit. In the largest deal of the month, Ares Management bought a 213-property portfolio including 34 office assets. Those properties sold for $718 million, led by single-tenant assets in industries such as insurance, banking, electronics, and energy. KKR, in a joint venture with Urban Renaissance Group, acquired three Seattle office buildings occupied by Amazon for nearly $580 million, at a 4.3% cap rate. Life science remains a popular target, and Alexandria sold a 70% stake in Merck’s South San Francisco facilities for $1,429/SF at a cap rate in the low fours. Several other assets or campuses traded during the month at north of $100 million.


Industrial sales remain strong, driven by portfolios. AIG acquired a 38-property portfolio in the Southeast from Partners Group and Equus Capital Partners for $1 billion. SREIT bought a 1.7-million-square-foot, 16-property portfolio in Colorado for $393 million from Etkin Johnson Group. Other portfolio deals included the aforementioned Ares acquisition; Blackstone; Principal RE Investors in a joint venture with CalSTRS; SREIT; and BTG Pactual Bank in a joint venture with Grupo Patio.


Multifamily remains a highly liquid class, accounting for more than a third of monthly sales. Harbor Group International acquired a 56-property portfolio of mostly 1980s-vintage assets in the Midwest and Florida for $390 million. Bridge Investment Group bought three properties it plans to renovate in Las Vegas for $182 million. These transactions show that investors are beginning to take on more risk. Single-asset trades were also attractive, with deals in Dublin, CA; San Diego, CA; Denver, CO; and Raleigh, NC. The Pioneer, a 2019-built asset in Everett, MA, sold for $132 million.


Portfolio sales are starting to pick up. As part of its 213-property acquisition, Ares secured 111 single-tenant retail assets throughout the U.S. for about $500 million. Redevelopment plays are also emerging: Prologis acquired the former Hilltop Mall in Richmond, CA, for $117 million, with preliminary plans for a mixed-use development of residential, retail, and modern logistics. Alexandria acquired the Watertown Mall in Watertown, MA, for $130 million. The mall is still operating, but the site has future development potential and sits in a rapidly growing life science cluster.


No major portfolios traded in the hotel market this month, but liquidity is improving. Seven different assets sold in April for north of $50 million, the largest being Montage Healdsburg Resort in Healdsburg, CA, for $265 million (130 rooms). Sunstone Hotel purchased the resort from Ohana Real Estate Investors. The 416-room Sir Francis Drake in San Francisco sold to a joint venture of Northview Hotel Group and Angelo Gordon for $157.6 million. Tishman Speyer acquired the former Sheraton in Bellevue, WA, planning to demolish it to build a mixed-use office and residential development. It sold for $152.3 million.