Blackstone-EOP deal to spark REIT buyouts-analysts

By Michael Flaherty

NEW YORK, Nov 20 (Reuters) - Blackstone Group's $20 billion takeover deal with Equity Office Properties Trust EOP.N opens the door for more large-scale transactions in the shrinking real estate investment trust (REIT) market, analysts said on Monday.

The Equity Office buyout, the largest REIT deal ever, has put in play several peers that investors previously thought were too expensive to attract private equity buyers.

"We think this makes every other office REIT, and perhaps every REIT, a "buy" today, as speculation will likely run rampant. If EOP is a seller, everyone is a takeout candidate," said John Guinee, an analyst at Stifel Nicolaus.

Among the companies likely to entertain buyout offers following the Blackstone-EOP deal are Boston Properties Inc. BXP.N, SL Green Real Estate Corp. SLG.N and Maguire Properties Inc. MPG.N, analysts said.

Blackstone's agreement with EOP came a week after REIT Reckson Associates Realty Corp. RA.N got a $4.6 billion bid from activist investor Carl Icahn and real estate firm Macklowe.

"We thought everything with a market capitalization above $4 billion was immune" from a private equity takeover, said Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) Research Analyst Louis Taylor. "This deal clearly suggests otherwise."

Fueled by cash-rich private equity investors, historically low interest rates and rising property values, real estate merger and acquisition activity is the highest on record. More than 2,200 real estate deals were announced so far this year totaling $367 billion, up from 2,100 deals last year worth $249.1 billion, according to financial data provider Dealogic.

Buyout firms are also attracted to the strong cash flows REITs typically generate, as the firms use the cash to pay down debt used to finance their deals.