May 2025

North America

·Blackstone-owned Chicago office tower, River North Point, hit by c. 80% valuation decrease, in-line with other Chicago offices trading at discounts larger than 70%. In a stark sign of continued office market stress, the appraised value of River North Point — a Blackstone-owned office complex in Chicago — has plunged by 81%, from $489 million in 2018 to just $87.4 million today. This triggered a bond rating downgrade by KBRA for the $310 million CMBS loan tied to the asset. The 1.3 million sq ft property at 350 N. Orleans St. is now 61% leased, with half the space listed as available, and has been in special servicing for two years due to cash flow issues, delinquencies, and market deterioration. A receiver has been appointed and foreclosure is now being considered. Blackstone, which acquired the asset in 2015 for $378 million, has opted not to inject further equity. This case underscores broader distress in U.S. urban office real estate and is a red flag for investors exposed to similar aging trophy assets. This follows Namdar Realty and Mason Asset Management’s purchase of the 57-story 70 W. Madison at a steep discount, reportedly 70%+ below its peak estimated valuation of c. $250 million. The 65-story stower at 311 S. Wacker Drive is under contract to sell for under $70 million, reflecting a more than 75% drop from its 2014 purchase price of $302 million by Zeller Realty Group. (Source: Kroll Bond Rating Agency, CoStar, 2025)

River North Point in Chicago

·5 Times Square (New York), owned by RXR Realty, SL Green Realty, and Apollo, embraces residential conversion from former EY headquarter office. New York has approved a major office-to-residential transformation at 5 Times Square, formerly home to EY as a c. 920,000 sq ft office tower of 38 stories, paving the way for 1,250 apartments as part of a public-private initiative. The building, plagued by a 77% vacancy rate since EY’s 2022 departure, will retain its retail space and dedicate 25% of units to affordable housing. This marks one of the city's largest commercial-to-residential conversions, aiming to revitalize Times Square as a live-work-play district. The project leverages the 467-m tax incentive, which is increasingly favored by developers due to the absence of minimum construction wage requirements, unlike ground-up alternatives. New York faces a tight housing market with multifamily vacancies below 3%, while office vacancies remain high at 13.5%. Other large conversions underway include 25 Water Street and the former Pfizer HQ, signaling a broader shift in Midtown’s property landscape. Fully leased luxury developments like The Ellery show growing demand for high-end residential living in Times Square. (Source: CoStar, 2025)

5 Times Square, New York

·Blackstone lines up nearly USD 3bn in CMBS refinancings across various property portfolios including logistics, life sciences, and retail assets. Blackstone is preparing to bring $2.9 billion in commercial mortgage-backed securities (CMBS) to market across three major portfolio refinancings. The largest, a $1 billion deal backed by 58 industrial assets across 13 states, features a floating-rate loan with an expected interest rate cap of 5.34%. A second, $915 million bond offering will refinance part of a $1.33 billion loan secured against the University Park at MIT life sciences campus in Cambridge. The 10-year fixed-rate loan is expected to price at 6%. The third refinancing is a $640 million floating-rate loan backed by 23 grocery-anchored retail centers, with proceeds refinancing $493 million in debt and returning roughly $144.5 million in equity to Blackstone REIT. The loan includes three 1-year extension options. These offerings mark a continued resurgence in the CMBS market following April’s slowdown, and position Blackstone to surpass its 2024 securitization total of $14.1 billion. (Source: Moody’s Ratings, Fitch Ratings, Kroll Bond Rating Agency, CoStar, 2025)

45 Sydney St, Cambridge, Massachusetts included in Blackstone’s MIT life sciences campus

·US office market showing signs of recovery, but smaller leases and smarter space use define the new trend. Occupiers increasingly favor pre-built suites, smaller footprints, and selective expansion amid stabilized pricing. The U.S. office market is showing real signs of recovery in 2025, with leasing activity nearing pre-pandemic highs. But while volume is back, lease sizes are 15–20% smaller on average, reflecting a durable shift in occupier strategy. Tenants are opting for pre-built, turnkey spaces, often under 10,000 square feet, to reduce fit-out costs and retain flexibility. Pricing stabilization is also prompting a slight decline in occupier-driven purchases—from nearly 30% of transaction value in 2024 to a level closer to the historical average of 10%—but user-buyers still represent an elevated share. Meanwhile, despite reducing their overall footprint, many occupiers now hold about 10 square feet more per onsite worker than in 2014, driven by hybrid models, peak-day space demands, and the desire for higher-quality, amenity-rich work environments. These behavioral shifts suggest that while physical footprints have shrunk, tenant expectations around quality and flexibility have expanded—and may reshape the market for years to come. (Source: US Census Bureau, Bureau of Labor Statistics, CoStar, 2025)

Average lease sizes have been shrinking in most markets across the US

·US multifamily giant, Equity Residential, acquires Atlanta multifamily portfolio for sub-5% cap rate, showing selective core REIT buyers returning to market. Chicago-based US multifamily REIT, Equity Residential (NYSE: EQR), is acquiring eight Atlanta-area apartment communities from Blackstone for $535 million, continuing its strategic expansion into Sun Belt markets. The deal includes 2,064 units across well-located suburban properties averaging 16 years in age, with the oldest built in 1995. This marks another large-scale divestment by Blackstone and a strong show of confidence by EQR in Atlanta’s job growth, affordability, and supply-demand fundamentals. The purchase follows Equity’s six-property buy in the region last year and expands its Atlanta holdings to 30 properties with over 8,400 units. Despite sub-5% initial yields, EQR appears to be banking on future rent growth and a tightening supply pipeline to generate long-term returns. With many institutional buyers sidelined, public REITs like EQR are stepping in to reset pricing floors and quietly reassert dominance. (Source: CRE Analyst, CoStar, Equity Residential, 2025)

Equity Residential’s new Atlanta portfolio includes Cortland Lex

Europe

·Mid-market real estate managers eye M&A surge amid fundraising challenges. Despite a slight uptick in capital raised in 2024 (€118bn), mid-market real estate managers continue to struggle in a tough fundraising environment, especially compared to large platforms. INREV CEO Casper Hesp anticipates a wave of M&A activity over the next 12–18 months as these managers seek scale, efficiency, and broader investor appeal. Institutional investors are consolidating relationships, favoring proven, resilient managers with global reach. Mid-market firms, although more agile and locally focused, lack the operational depth to meet today’s regulatory and ESG demands. Merging with peers could offer these firms new capital access, wider geographic presence, and cost savings. The landscape is also shifting due to the rise of tech-driven platforms and renewed interest in retail and niche real estate sectors. As the market tightens, consolidation is increasingly viewed not just as an opportunity—but a necessity. (Source: INREV, Green Street, 2025)

M&A Transactions

Year	Target Firm	Acquirer / Partner	Deal Type / Note
2025 (Ongoing)	Patron Capital	Mitsubishi Estate Co. (in talks)	Early-stage discussions; due diligence underway
2025	Proprium Capital Partners	Legal & General	75% stake acquired
2024	BauMont Real Estate Capital	M&G Real Estate	Majority stake acquired
2024	Blackbrook	Cain International	Merger
2024	Empira	Partners Group	Merger
2023–2028	Aermont Capital	Keppel Corporation Ltd.	50% stake in 2023; full acquisition planned by 2028
2023	Tristan Capital	Candriam (New York Life Investments)	80% stake in two tranches
2021	DRC Capital	Savills IM	Final 75% stake acquired (initial 25% in 2018)
2020	Benson Elliot Capital Management	PineBridge	Full acquisition
2019	Palmer Capital	Fiera Capital Corporation	80% stake acquired
2018	Brockton Capital	Alony Hetz Properties	Strategic investment
2014–2019	ThreadGreen Partners	Gramercy → Clarion	Initial acquisition in 2014, rolled into Clarion in 2019
2010	Europa Capital	Mitsubishi Estate Co.	Full acquisition

·Ontario Teachers’ Pension Plan (OTPP) ramps up Europe investment with CAD 5bn deployed, eyes more residential and logistics. Ontario Teachers’ Pension Plan (OTPP) has rapidly committed over C$5bn to European real estate in just five years, pivoting away from retail and office towards residential and logistics. The Canadian giant initially scaled via operating partner equity stakes—such as Boreal IM, Stanhope, and Long Harbour—but is now favouring direct investments and joint ventures without owning operating companies. It recently expanded its Nordics logistics portfolio and is eyeing further residential plays in Sweden and Germany, citing strong fundamentals and limited supply. OTPP’s European head, Jenny Hammarlund, notes they aim to build a long-term, resilient portfolio rather than time markets. While student housing and data centres are on the radar, multifamily remains the immediate focus. Despite global geopolitical tensions, OTPP remains steady in its strategy, leveraging its long-term capital advantage during volatile periods. (Source: OTPP, Green Street, 2025)

Jenny Hammarlund, Senior Managing Director at OTPP

·Germany is facing a EUR 31bn real estate debt funding gap between 2025 and 2027, providing an opportunity for alternative lenders. German real estate covers over a third of the €86bn real estate debt shortfall across Europe, according to AEW Europe. This is primarily due to falling collateral values on loans originated between 2016 and 2023, especially in the office and residential sectors. Germany’s expected loss rate on these loans (3.1%) still tops the European average (1.8%). Several factors explain Germany’s higher vulnerability: banks continued lending longer due to cheap Pfandbrief funding and laxer regulation compared to countries hit harder by the global financial crisis. Now, with banks retreating amid regulatory tightening, debt funds and alternative lenders are stepping in. These funds offer more flexible, albeit costlier, financing—whole loans now yield IRRs between 7.5% and 12%, depending on loan-to-value and asset risk. Mezzanine capital is also booming, offering up to 85% LTC with returns of 9% to 15%. However, recent insolvencies (e.g., Signa, Euroboden) have made institutional investors more cautious. While traditional banks remain active via "pretend-and-extend" and back-leveraging strategies, the volume of non-performing loans has risen sharply (up 40.5% to €17.3bn). Despite rising distress indicators, significant asset sales remain limited, with owners using bridge loans to buy time and preserve “hope value.” (Source: AEW Europe, KPMG, Green Street, FAP Group, 2025)

Germany Debt Funding Gap By Asset Class (EUR bn)

·Iberia (Spain and Portugal) shines as a resilient market with strong investment momentum.  The Iberian Peninsula is becoming a standout destination for real estate investment, driven by Spain and Portugal’s economic resilience, youthful demographics, and strong fundamentals. In 2024, Spain and Portugal outpaced the eurozone average in GDP growth, supported by domestic demand and a revitalized investment landscape. Real estate investment rose 23% year-on-year, with the region’s share of total European investment climbing to 8%, up from just 2% in 2015. The living sector leads the charge, thanks to rising rents, supply constraints, and demographic tailwinds, including strong demand for PBSA, senior living, and flex living. Alternative sectors like data centres, healthcare, and agribusiness are also attracting capital, alongside robust growth in logistics, office, retail, and hospitality. Prime yields are expected to compress slightly, but rental growth is likely to drive strong net returns. With Madrid, Barcelona, and Lisbon ranking among Europe’s top cities for investment, Iberia offers a compelling mix of stability, growth, and long-term opportunity. (Source: CBRE, Green Street, 2025)

Strong investment appetite for Spain and Portugal

·Canadian giant, CPP Investments, in exclusivity to acquire Brookfield’s EUR 1.2bn Spanish and Portuguese student housing platform as part of its expansion strategy. CPP Investments is in exclusive negotiations to acquire Brookfield’s Livensa student housing platform for a record-breaking €1.2bn, marking the largest student housing transaction in Iberia to date. The Canadian pension fund beat strong competition from major contenders including Bankinter Asset Management with Plenium Partners and KKR. The deal, which launched in March, is expected to close within two weeks. Livensa’s portfolio spans 9,000 beds across 22 assets, including developments under construction. This acquisition aligns with CPP’s aggressive student housing expansion strategy, targeting 25,000 operational beds by 2031, following its consolidation of the Nido platform. While it builds scale in Iberia, Italy, and Germany, CPP is also divesting its Dutch assets due to unfavourable rent controls. Brookfield originally acquired Livensa in 2019 via its $15bn Strategic Real Estate Partners III fund. (Source: Green Street, 2025)

Livensa Portfolio (9,000 beds across 22 properties in Iberia)