Deal Activities Heat Up In US Real Estate As Compass Plots $10 Billion IPO and MetLife Clocks $10.7 Billion Equity Investments

Investing, Market Insider, Real Estate
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The US real estate sector is heating up amid accelerated economic recovery fuelled by an aggressive vaccination campaign. Strong demand for new homes at the back of declining inventories point to a market-ready to take off. Likewise, deals and activities in the sector are increasingly edging higher to the extent of Compass Inc. plotting a $10 billion IPO.

Compass Inc. IPO

The online real estate company has made the necessary filings for the IPO  in which it plans to offer 36 million Class A shares priced between $23 and 26 a share. The Softbank-backed real estate platform could end up raising close to $900 million from the IPO.

Since its inception in 2012, the company has raised $1.5 billion, attracting funding from Softbank, Goldman Sachs, and the Pension Plan Investment board. In 2017, the company secured a $450 million financing from Softbank’s  Vision Fund, giving it a valuation of $2.2 billion at the time.

It plans to go public, grossing over $300 billion in transaction volume on its online real estate platform. The company is currently working with over 19,000 agents spanning across the country. Last year, it recorded a 56% jump in revenues that totaled $3.72 billion. However, net income narrowed to $270 million from $388 million in 2019.

The IPO listing will follow expansion into the Orland real estate market. The real estate brokerage firm has opened offices in the city having also hired 38 agents with a  combined sales volume of $300 million in 2020.

Expansion into Florida comes when people are increasingly flooding the state, conversely fuelling a  spike in demand and housing prices. In February, home sales were up by more than 19% compared to last year.

Compass should be a big hit in the state, given that it prioritizes the use of tech-based tools that agents can use to enhance real estate transactions. The technology has proved to be of great use at a time when in-person contact is extremely limited owing to COVID -19.

MetLife Transaction Milestone

Another clear indication that activities and operations in the US real estate sector are heating up is the confirmation that MetLife completed $10.7 billion in commercial real estate debt and equity transactions in 2020. The company also acquired $2.2 billion worth of properties, taking its real estate equity’s gross value to $32.7 billion.

Conversely, the company’s value of commercial real estate assets under management rose to $106.7 billion on the company shrugging off the unprecedented challenges triggered by COVID-19. Amid the challenges, the company remained a source of debt capital for the commercial real estate sector.

Nuveen Linden Acquisition

Separately, Nuveen Global Cities REIT has completed the acquisition of one of the three medical office and life sciences properties it intended to acquire. The company has paid $35 million to acquire Linden Oaks 43,000 square foot medical office currently occupied by a long-term lease tenant.

The purchase brings to 14% of the New York-based REIT portfolio on healthcare facilities. Increased investment in healthcare facilities stems from growing optimism that the sector will continue to grow in light of the pandemic.

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