CoStar acquires Matterport in $1.6bn transaction

BY Fraser Tennant

In a move that boosts its digital real estate services, real estate data provider CoStar Group is to acquire digital twin platform Matterport in a transaction valued at $1.6bn.

Under the terms of the definitive agreement, CoStar will acquire all outstanding shares of Matterport in a cash and stock transaction valued at $5.50 per share. Matterport stockholders will receive $2.75 in cash and $2.75 in shares of CoStar Group common stock for each share of Matterport common stock.

Utilised in nearly every sector of real estate, spanning residential, commercial, hospitality, retail and industrial spaces, among others, Matterport has curated what is considered the largest and most precise collection of spatial property data worldwide, with over 12 million spaces captured in 177 countries, representing more than 38 billion square feet of digital property under management.

“We are thrilled to join forces with CoStar Group, a long-standing customer and partner with a shared vision for transforming global real estate through technology and digitalisation,” said RJ Pittman, chair and chief executive of Matterport. “This transaction is another significant milestone that acknowledges the groundbreaking work Matterport has accomplished in 3D digital twin technology and artificial intelligence (AI)-driven property intelligence.”

The transaction has been unanimously approved by the Matterport board of directors.

“There is no better way to remotely experience space than via Matterport,” said Andy Florance, founder and chief executive of CoStar Group. “We intend to support and invest in research and development opportunities to further develop Matterport’s spatial technology, including the application of AI and machine learning to extract information from the 3D spatial data library as well as using generative AI to imagine and reimagine physical spaces.”

The transaction is expected to be completed during 2024, subject to the approval of Matterport stockholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

“With CoStar’s expansive reach and scale in property research and analytics and our joint commitment to innovation, we believe that this powerful combination will transform how properties are marketed, sold and managed worldwide,” concluded Mr Pittman. “It offers Matterport's stockholders the opportunity to participate in the value creation and future growth prospects of our combined efforts.”

News: CoStar to buy Matterport in $1.6 bln deal to boost digital real estate services

Express Inc files for Chapter 11 bankruptcy protection

BY Richard Summerfield

Clothing retailer Express Inc has filed for Chapter 11 bankruptcy protection and announced its intention to close more than 100 retail locations across its portfolio of brands

According to the filing with the bankruptcy court in Delaware, Express has assets and liabilities in the range of $1bn to $10bn.

The company has a stable of brands including Express, Bonobos and UpWest Express. According to its website, Express operates around 530 Express retail and Express Factory Outlet stores in the US and Puerto Rico and around 12 UpWest retail stores, in addition to online operations for these brands.

In a statement announcing the filing, Express noted that it filed for bankruptcy to “facilitate” a sale process of most of its retail stores and operations to the investor group, which includes WHP, Simon Property Group and Brookfield Properties. The company received a nonbinding letter of intent from the investors to buy the assets and has also secured $35m in new financing from some of its existing lenders, subject to court approval. Express also secured $49m in cash from the IRS related to the CARES Act – a critical influx of liquidity that the company had been waiting on to shore up its balance sheet.

The company also named Mark Still as its new chief financial officer (CFO), effective immediately. Mr Still had served as interim CFO since November 2023.

“We continue to make meaningful progress refining our product assortments, driving demand, connecting with customers and strengthening our operations,” said Stewart Glendinning, chief executive of Express. “We are taking an important step that will strengthen our financial position and enable Express to continue advancing our business initiatives. WHP has been a strong partner to the Company since 2023, and the proposed transaction will provide us additional financial resources, better position the business for profitable growth and maximize value for our stakeholders.

“Express has a strong portfolio of brands and a premier omnichannel platform,” he continued. “Our top priority remains providing our customers with the contemporary styles and value they expect from us. We thank our associates for their continued hard work and commitment, and we appreciate the ongoing support of our vendors, suppliers and business partners.”

Express, which was founded in 1980 by Les Wexner’s Limited Brands, has endured a difficult few years. Its sales have plummeted while debt and costly leases dragged down its business.

News: Apparel retailer Express files for US bankruptcy protection, to close over 100 stores

DS Smith to be acquired by International Paper in $7.2bn all-stock deal

BY Richard Summerfield

UK packaging specialist DS Smith is to be acquired by US rival International Paper in an all-stock deal worth $7.2bn.

The all-stock transaction will create a global leader in packaging, according to International Paper. Upon completion of the sale, DS Smith shareholders will own about 33.7 percent of the combined entity, with International Paper shareholders owning the rest. Subject to shareholder and regulatory approval, the deal is expected to close later this year.

International Paper agreed to pay 0.1285 new shares of International Paper for each DS Smith share, or about 415 pence based on the share prices of both companies as of late March, when the US company publicly announced its interest.  

The formal agreement for DS Smith gives International Paper the backing of the company’s board, however rival suitor Mondi Plc could still return with a competing offer. In March, Mondi reached an agreement in principle to buy DS Smith in an all-stock deal of £5.14bn, with the purchase price representing a 33 percent premium at that time and DS Smith shareholders getting control of 46 percent of the new company. Whether Mondi will return with a further bid remains to be seen. The company has until 23 April to make a firm offer or walk away from any potential deal.

“Combining with DS Smith is a logical next step in IP’s strategy to drive profitable growth by strengthening our global packaging business,” said Mark S. Sutton, chairman and chief executive of International Paper. “DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements IP’s capabilities and will accelerate growth through innovation and sustainability. We are confident this combination will drive significant value for our employees, customers, and shareholders.”

“Bringing together the capabilities and expertise of both companies will create a winning position in renewable packaging across Europe, while also enhancing IP’s North American business,” said Andrew K. Silvernail, chief executive-elect of International Paper. “I firmly believe this strategic combination offers a unique and highly compelling opportunity to create tremendous shareholder value. I am also committed to working with the teams to deliver the expected synergies, along with the ongoing profit improvement initiatives across the IP portfolio.”

“The combination with IP is an attractive opportunity to create a truly international sustainable packaging solutions leader that is well positioned in attractive and growing markets across Europe and North America,” said Miles Roberts, chief executive of DS Smith. “It combines two focused and complementary businesses. DS Smith has grown significantly through a dedication to customers, focus on innovation, quality of packaging and high levels of service. In a dynamic sustainable packaging landscape, the combination will enhance our global proposition to customers, create opportunities for colleagues and drive value for shareholders who can remain fully invested in such an exciting business.”

News: DS Smith agrees $7.2 bln all-share deal with International Paper

AIR Communities goes private in $10bn deal

BY Fraser Tennant

In a move that takes the real estate investment trust private, US alternative investment management company Blackstone is to acquire Apartment Income REIT – known as AIR Communities – in an all-cash transaction valued at approximately $10bn.

Under the terms of the definitive agreement, Blackstone will acquire all outstanding common shares of AIR Communities for $39.12 per share. Subject to and upon completion of the transaction, AIR Communities’ common stock will no longer be listed on the New York Stock Exchange.

The transaction has been unanimously approved by the AIR Communities board of directors.

“The transaction will strengthen the AIR mission to provide homes for others, be a great place to work, act as responsible stewards of AIR communities, and be a trusted partner to AIR investors,” said Terry Considine, president and chief executive of AIR Communities. “The business the AIR team has built will be improved and expanded by collaboration with Blackstone and a shared focus on serving residents and investing wisely.”

AIR Communities’ portfolio consists of 76 high-quality rental housing communities concentrated primarily in coastal markets including Miami, Los Angeles, Boston and Washington DC. Blackstone plans to invest more than $400m to maintain and improve the existing communities in the portfolio and may invest additional capital to fund further growth.

“AIR Communities represents the highest quality, large scale apartment portfolio we have ever acquired, and is located in markets where multifamily fundamentals are strong,” said Nadeem Meghji, global co-head of Blackstone Real Estate. “We are very impressed by the terrific operating team at AIR Communities and look forward to working closely with them, while continuing to deliver a fantastic resident experience.”

A global leader in real estate investing, Blackstone is the largest owner of commercial real estate globally, owning and operating assets across every major geography and sector, including logistics, residential, office, hospitality and retail.

The acquisition is expected to close in the third quarter of 2024, subject to approval by AIR Communities’ stockholders and other customary closing conditions.

Mr Considine concluded: “The AIR team is grateful to Blackstone for the opportunity and for its faith in what can be accomplished working together.”

News: Blackstone to take Apartment Income REIT private in $10bn deal

99 Cents Only files for Chapter 11

BY Fraser Tennant

Citing inflationary pressures that made its business model unsustainable, budget retailer 99 Cents Only has filed for Chapter 11 bankruptcy.

99 Cents Only Stores, together with its financial and legal advisers, engaged in an extensive analysis of all available and credible alternatives to identify a solution that would allow the business to continue.

Following months of actively pursuing these alternatives, the company ultimately determined that an orderly wind-down was necessary and the best way to maximise the value of 99 Cents Only Stores’ real estate and other assets.

To that end, the company has secured $60.8m in senior secured super priority debtor in possession financing consisting of $35.5m in new money to be provided by an entity affiliated with certain of the company's existing stakeholders, subject to court approval.

To date, all 99 Cents Only Stores remain open, and the company has commenced going out of business sales at all 371 store locations, offering customers significantly reduced prices on a wide range of products. The company has also filed customary motions with the bankruptcy court to support its operations through the wind-down process, including payment of employee wages.

“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” said Mike Simoncic, interim chief executive of 99 Cents Only Stores. “Unfortunately, the last several years have presented significant and lasting challenges in the retail environment, including the unprecedented impact of the pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds, all of which have greatly hindered the company’s ability to operate.”

To help facilitate the wind-down, the company has appointed Chris Wells, managing director at Alvarez & Marsal, as chief restructuring officer, with Mr Simoncic stepping down.

Founded in 1982, 99 Cents Only Stores LLC currently operates nearly 371 stores located in California, Texas, Arizona and Nevada. It offers a broad assortment of name brand and other attractively priced merchandise as well as compelling seasonal product offerings.

Mr Simonic concluded: “We deeply appreciate the dedicated employees, customers, partners and communities who have collectively supported 99 Cents Only Stores for decades.”

News: Retailer 99 Cents Only files for bankruptcy, plans to shut down