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Real Estate & Construction

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Fundamentals

Size Analysis: At the end of 2023 Q4, the market capitalization of the Real Estate & Construction industry was recorded at $21 trillion. This represents an increase from the previous quarter's market capitalization. The number of reporting companies also saw an uptick, with 2,973 less companies contributing to the market cap this quarter. In terms of industry activity, there was a rise in the transaction value and a more significant increase in the number of transactions when compared to the prior quarter.

Public Market Dynamics: The industry's year-over-year returns for the largest 20 companies were at 19.09%, substantially outperforming the global industry average, which stood at 1.68%. In contrast, the smallest 20 companies reported a decline in returns of -5.21%. When benchmarked against the SPY index, the industry overall showed a deficit of -17.67% compared to the index. However, it's worth noting that the industry has seen some recovery, with an increase of 1.84% since the last quarter, while the SPY index itself saw a smaller increase of 3.12%. This indicates that while the industry is still lagging behind the broader market, it is starting to close the gap with a moderate improvement in performance.

Transaction Trends: For 2023 Q4, the industry reported 57 M&A transactions totaling $21 billion. Median multiples were 5.62x revenue and 14.96x EBITDA. There were also 96 transactions with less than 100% value acquisition, 67 minority interest acquisitions, and 16 DLOCs transactions with a median of 19.53%.

Dispersion Insights: In 2023 Q4, Asia was the top revenue generator in the Real Estate & Construction industry, with North America also contributing significantly, despite both regions experiencing a slight drop in revenue compared to the previous quarter. The trend over the past two years shows revenue volatility with a general decline from the highs of Q4 2021. North America was at the forefront of M&A activities, while Asia was more active in public offerings and private placements, indicating a dynamic transaction environment in these regions.

Methodology

We screened CapitalIQ using its industry classification. Transactions were filtered by announce date within the last 3 years. Companies were filtered by having a public company type. The main industries selected were "Materials" and "Real Estate". CapitalIQ sectors "Materials", "Equity Real Estate Investment Trusts (REITs)", and "Real Estate Management and Development" were used as categories. CapitalIQ subsectors "Biotechnology", and "Life Sciences Tools and Services" were used as categories. Our sectors were defined by keywords from the CapitalIQ market intelligent industry classification and CapitalIQ primary industry classification. Our Materials' sectors were defined by keywords from the CapitalIQ market intelligent industry classification. Our Real Estate's sectors were defined by keywords from the CapitalIQ primary industry classification.

THIS REPORT IS NOT TO BE USED OR CONSIDERED UNDER ANY CIRCUMSTANCE BY ANYONE AS INVESTMENT ADVICE

This research report is for informational and discussion purposes only. Information presented here is not investment advice of any kind to any person and does not constitute a recommendation as to the purchase or sale of any interests or as to any other course of action. General, financial, and statistical information concerning the details of this report and related industry are from sources Spaulding Financial believes to be reliable.

Spaulding Financial has accurately reflected such information in this research report; however, Spaulding Financial makes no representation as to the sources’ accuracy or completeness and has accepted this information without further verification. Neither all nor any part of the content of this report may be conveyed to the public through advertising, public relations, news, sales, mail, direct transmittal, or other media without the prior written consent of Spaulding Financial. Spaulding Financial ’s research is as of the date reported herein.

Spaulding Financial has no affiliation with any of the companies comprising the industry used as a basis for research in this report, nor does Spaulding Financial hold any investments in the companies listed herein. The content of this report may be used, in part, as a basis for any work that Spaulding Financial performs for you in the future at the sole discretion of Spaulding Financial. All data is from Capital IQ database.

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