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European real estate M&A hits 13-year low in 2023

Announced acquisitions targeting Europe-based real estate companies between January and December 2023 were at their lowest annual number since at least 2010.

Deal count was down to 216 from 306 in 2022. Transaction value declined more than 50% year over year to $10.40 billion from $21.24 billion, according to S&P Global Market Intelligence data.

Real estate M&A volume and aggregate value in the region slowed for a second straight year in 2023.

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During the final quarter of 2023, transaction volume fell 26% to 54 from 73 in the fourth quarter of 2022. The aggregate value of acquisitions between October and December 2023 came to $2.01 billion, up 76% year over year from $1.14 billion.

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Outlook

The slowdown in investment activity was due to the lack of larger deals as well as repricing, according to CBRE Group Inc.'s "European Real Estate Investment Figures Q3 2023" report. The report noted activity could pick up in the second half of 2024 as interest rates stabilize and economic prospects improve.

The logistics and residential sectors in Europe are expected to see steady demand due to structural tailwinds, while hotels and hospitality are expected to benefit from booming tourism, Judith Fischer, associate, commercial research, wrote in Knight Frank LLP's European real estate outlook 2024 report.

Top deals

The largest deal in 2023 was French real estate investment trust Icade's agreement for the sale of its healthcare arm, Icade Santé SAS, now known as Praemia Healthcare, to Sogecap SA, Primonial Real Estate Investment Management (PREIM) and CNP Assurances SA for €3.71 billion, including debt. The completion of the sale of the entire portfolio is expected to occur in 2025.

The second-largest transaction was private equity firm TPG Capital LP's offer to acquire Belgian REIT Intervest Offices & Warehouses for €1.45 billion.

BNP Paribas, KBC Securities and Freshfields Bruckhaus Deringer are advisers to TPG. Lazard is financial adviser and Allen & Overy acts as legal counsel to the supervisory board and management board of Intervest.

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