The REIT stuff

January 8, 2014 admin

1-8 Empire State BuildingThe past year saw a marked increase in the number REITs around the world, despite uncertainty regarding QE tapering — the end of bond purchases by central banks as part of an effort to keep interest rates low — which could mean a rise in interest rates and could have the concomitant effect of making real estate securities a less attractive investment.

Even with those headwinds, some 19 REITs had IPOs in the United States in 2013, according to data from NAREIT. Just eight firms went public in 2012 and 2011, and nine REIT IPOs occurred in 2010.

The IPO wave included a couple highly anticipated public offerings from the firm that owns the Empire State Building and a REIT backed by The Blackstone Group, which both raised approximately $1 billion. In the previous few years, no REIT had raised more than a half billion.

Internationally, there were also new REITs in 2013. Ireland introduced the REIT structure, and a couple of firms, Green REIT and Hibernia REIT, have already taken the plunge.

The REIT IPO trend could well continue through 2014. According to Schecky Schechner, a managing director and Americas head of real estate investment banking at Barclays Capital:

“Well, we’ve had, obviously, a pullback in REIT stock prices due to the rise in interest rates and other factors. Right now, a lot of the stocks are down. In that environment, it may be somewhat more complicated for REIT investors, but good deals are getting done at decent discounts to the stock prices.”

LorettawebfinalLoretta Clodfelter is production and copy editor at Institutional Real Estate, Inc.

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