IPO Market Daunting for REITs

7/21/2011 | By Matt Bechard
After canceling its initial public offering in 2010, Welsh Property Trust remains content to stay a private company for the time being, according to CEO Scott Frederiksen.

In a REIT.com video interview at REITWeek 2011: NAREIT's Investor Forum at the Waldorf=Astoria in New York, Frederiksen discussed Welsh Property’s decision to pull back its IPO. Frederiksen expressed skepticism that any REIT would have success holding an IPO in the current economic market.

“The REIT IPO market continues to be choppy,” Frederiksen said. “A lot of the people who have attempted it have priced below their range, they’ve traded it off after they’ve opened for trading. I’d say it’s difficult.”

Instead, Frederiksen commented, Welsh Property has been using private equity funds to take advantage of a welcoming market for acquisitions. Frederiksen wouldn’t completely rule out another attempt to go public, though.

“Would we go back to the public market? Not in this market, but in a healthy market I think it’s something we’d look at,” Frederiksen said. “Is it out of the cards? No, but we’re not actively taking steps that way either.”

Much like the REIT IPO market, development activities have been constrained, according to Frederiksen. Existing assets remain a better bargain than new construction, Frederiksen said.

“The incentive to go out and take development risk is mitigated by the fact that today you can go out and buy for less than it costs to build new,” Frederiksen said. “Until that reverses, it's probably not a healthy development market.”

Frederiksen also discussed Welsh Property’s sustainability program: “It’s a big part of everything that we look at today for construction and architecture.”

Frederiksen estimated that as a general rule of thumb, building facilities in accordance with LEED standards adds roughly 15 percent to developers’ upfront costs. However, he noted that efficient buildings create operating savings going forward that offset those initial costs.

COMMENTS

plus_icon
No Comments To Display.
Showing 0 to 0 of 0 comments | Previous | Next
User Name:
Comment:
Enter Code: *
Thank you for your comment.

Please click here to add more comments.

IN NEWS

video

Fundamentally Speaking: Federal Reserve Policy Unlikely to Change Soon

5/22/2013
video

Shoppers Want More from Malls

5/22/2013
video

Europe Real Estate Debt Funds Aggressively Pursuing New Capital, Study Says

5/17/2013
video

Fitch Ratings Says CMBS Delinquencies Lowest in Five Years

5/16/2013
video

Property Values Hovering Around Market Peaks

5/13/2013
video

Book Offers ‘Road Map’ to REIT Investing

5/10/2013
video

Brookfied-Office-Properties-Focused-on-Reducing-Carbon-Footprint

1/1/0001
video

Property Values Hovering Around Market Peaks

5/13/2013
video

Book Offers ‘Road Map’ to REIT Investing

5/10/2013
video

Reimbursements, Care Level Dominant Themes for Health Care REITs

11/20/2012
video

Leader in the Light and GRESB Advance Sustainability in Commercial Real Estate

5/3/2013
video

Macerich Added to S&P 500 Index

5/8/2013

FEATURED

arrow
arrow