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Lawyer sees synergies between listed and non-listed REITs

04/11/2014 | By Allen Kenney

Judith Fryer, principal shareholder with Greenberg Traurig, joined REIT.com for a video interview during REITWise 2014: NAREIT’s Law, Accounting and Finance Conference held in Boca Raton, Fla.

Fryer was asked her opinions on the parallels between traded and non-traded REITs and her concept of the non-listed segment as “incubators” for stock exchange-listed REITs.

Non-traded REITs are not perpetual life REITs,” she said. “They have some endgame in mind, and in order to do that, they need an exit strategy. The exit strategy is a liquidity event. It can be listing or merging or selling all their assets, but there needs to be some event. At least initially, people thought that was going to be a listing. So when you think about it, it really is the perfect incubator for the REIT world if you have to take the non-traded REITs and list them.”

Fryer also said she sees synergies between non-listed and listed REITs.

“I’ve come to believe as I’ve watched these various exit strategies that, not only are they incubators, but that the two spaces—traded and non-traded—are very synergistic, she noted. “I would even say symbiotic. If you start to look at some of the transactions, they’re really playing together very nicely in the sandbox.”

Fryer used mergers as an example. She pointed out that non-listed REITs merge into listed REITs, and the opposite holds true, too.

Fryer said she “absolutely” expects that type of mergers and acquisitions activity to continue.

“There’s no doubt it will continue,” she said. She noted that transaction levels have grown in the past two years and are projected to grow again in 2014.

Fryer also discussed the transition of executives between listed and non-listed REITs.

“I’m beginning to see some cross-fertilization,” Fryer said. “I’m not sure that we’d call that a trend, but I think it’s showing more acceptability of the non-traded space. You even see other things going on. For example, you see some of the traded REITs creating some of the non-traded REITs. I think it’s here to stay, and I think you’re going to see more and more of it.”