WASHINGTON, DC-REIT returns bested the broader market in November, with the FTSE NAREIT All REITs and Equity REITs Indexes now up more than 100% from their March 6 lows, according to the locally based NAREIT.
This growth trajectory is being fueled, in large part, by the recapitalization of the REIT industry where REIT public equity and debt offerings have raised nearly $35 billion this year to date in 86 secondary equity offerings; eight IPOs and 33 unsecured debt offerings. The bottom line for REITs, according to these numbers as well as expected trends for 2012 is a buying spree for those companies that are well positioned.
There is still a huge amount of pain for the real estate industry, including certain aspects of the REIT sector to work through next year, NAREIT economist Brad Case tells GlobeSt.com. Values will continue to drop through 2012 for most properties, he predicts, among other issues such as scarce credit and liquidity. "What seems to be happening, though, is that the part of the market that is better managed seems to have turned the corner."
According to Case, the real estate markets have bifurcated-quite notably in the last several weeks-with one defining factor being property management expertise. "Some people got into real estate during the bubble and aren?t prepared to manage property in a poor market. Typically these are the same players that took on too much debt and so they are in trouble."
Meanwhile, it's been clear that public REITs have access to capital through the corporate bond markets among other avenues, putting them in a position to buy. "What we will see over the next few years is more properties will come onto the market but they will be coming on at the bottom in terms of prices and the reason they are on the market is because the seller is out of money or has defaulted, making REITs among the few players out there actually able to bid."
Other recent statistics from NAREIT:
The most active month for secondary equity was April, with 18 offerings that raised $6.57 billion. The most active month for debt was August, with nine unsecured debt offerings that raised $2.3 billion.
All eight IPOs took place between June and the end of September, raising a total of $2.6 billion. Seven of the IPOs were done by mortgage REITs.
Due to a growing wave of debt maturities and the continued constriction of the secured financing markets, making loan refinancing difficult, Case anticipates more properties in private hands to be placed for sale later in 2010.
-Source: GlobeSt.com
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