REITs in U.S. May Raise About $582 Billion for Acquisitions
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By David M. Levitt
June 3 (Bloomberg) -- Real estate investment trusts in the U.S. may raise about $582 billion by 2013 for acquisitions as competitors sell properties and values fall, the National Association of Real Estate Investment Trusts said.
Publicly-traded REITS will probably accumulate about $728 billion, including debt, for purchases, said Brad Case, vice president for research at NAREIT.
U.S. commercial real estate values fell almost 23 percent through March 31 from the peak in October of 2007 as credit dried up, Moody’s Investor Service reported on May 18. REITs including Vornado Realty Trust and Simon Property Group Inc. have raised $11.5 billion in offerings in the past two years and that’s “just the front edge of the iceberg,” Case said yesterday in an interview.
“The process that’s taking place starting right now looks very much like the process that we saw starting in early 1991,” he said.
That year marked the bottom of the last industry decline. In the next three years, the combined market capitalization of REITs increased at an annual rate of 48 percent, according to NAREIT.
Many closely held real-estate companies will become REITs over the next three years because the equity market will be seen as the easiest place to raise money, Case said.
Simon Property, the Indianapolis-based mall owner that’s the biggest REIT by market value, and Vornado, the third- largest, first sold shares to the public during the early 1990s.
The capital raised by REITs may enable them to reduce debt as a proportion of market value to as little as 25 percent by 2013 from 53 percent at the end of the second quarter, Case said.
Case and Michael Grupe, NAREIT’s executive vice president for research and investor outreach, prepared a presentation on the recapitalization of REITs that will be posted this week on the trade group’s Web site.
The association’s annual conference begins today in New York.
To contact the reporter on this story: David M. Levitt in New York at [email protected].
Last Updated: June 3, 2009 11:38 EDT
Share | Email | Print | A A A
By David M. Levitt
June 3 (Bloomberg) -- Real estate investment trusts in the U.S. may raise about $582 billion by 2013 for acquisitions as competitors sell properties and values fall, the National Association of Real Estate Investment Trusts said.
Publicly-traded REITS will probably accumulate about $728 billion, including debt, for purchases, said Brad Case, vice president for research at NAREIT.
U.S. commercial real estate values fell almost 23 percent through March 31 from the peak in October of 2007 as credit dried up, Moody’s Investor Service reported on May 18. REITs including Vornado Realty Trust and Simon Property Group Inc. have raised $11.5 billion in offerings in the past two years and that’s “just the front edge of the iceberg,” Case said yesterday in an interview.
“The process that’s taking place starting right now looks very much like the process that we saw starting in early 1991,” he said.
That year marked the bottom of the last industry decline. In the next three years, the combined market capitalization of REITs increased at an annual rate of 48 percent, according to NAREIT.
Many closely held real-estate companies will become REITs over the next three years because the equity market will be seen as the easiest place to raise money, Case said.
Simon Property, the Indianapolis-based mall owner that’s the biggest REIT by market value, and Vornado, the third- largest, first sold shares to the public during the early 1990s.
The capital raised by REITs may enable them to reduce debt as a proportion of market value to as little as 25 percent by 2013 from 53 percent at the end of the second quarter, Case said.
Case and Michael Grupe, NAREIT’s executive vice president for research and investor outreach, prepared a presentation on the recapitalization of REITs that will be posted this week on the trade group’s Web site.
The association’s annual conference begins today in New York.
To contact the reporter on this story: David M. Levitt in New York at [email protected].
Last Updated: June 3, 2009 11:38 EDT
