Look for transaction activity in the REIT market to stay consistent in the near future, according to Jim Hanks, partner with Venable LLP. That includes full portfolios as well as one-off deals.
“I think there’s a strong likelihood that there will be continued deal activity, or maybe even increased deal activity,” Hanks said in a video interview last month with REIT.com at REITWise 2012: NAREIT’s Law, Accounting and Finance Conference in Hollywood, Fla. “With the stock market doing as well as it’s doing, I think there’s good reason to believe there will be opportunities for REITs in the M&A market.”
Hanks also said he’s “definitely” anticipating an upswing in the number of REIT IPOs. That could include REIT portfolios that were taken private in the last decade coming back on the public market.
“I think that with the strong market, there will be good receptivity to REIT IPOs,” Hanks said. “A lot of REITs went private in the first decade of this century. There’s a lot of real estate that has been public before that could come back out into the public markets. Real estate that has an established track record that should be reassuring to investors.”
For companies that are mulling the move to go public, Hanks said he’s encouraging them to be careful with how they structure some of their corporate governance provisions.
“My advice to our clients that are in the pre-IPO planning stages is to think very long and hard before you would get into a position where you have given up, much less permanently, some strong, protective measures,” Hanks said.
Hanks said he’s encouraging clients to be especially wary of hostile takeovers, whether they come in the form of hostile tender offers or hostile proxy contests.
“There has been a lot of empirical data over the last several years showing that companies that have good defenses against that kind of activity get higher premiums,” he said.
Hanks also advised that companies pay attention to their corporate governance profiles from ISS, especially prior to mailing their proxy statements.
“Once their proxy statement is mailed, then ISS will review and revise its profile based on this year’s proxy statement,” he said. “If there are things in there that ISS doesn’t like, then that may affect its voting recommendations on specific proposals.”