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Menna Says More Controlled REIT IPOs Possible

12/13/2013 | By Allen Kenney

Gil Menna, a partner with the law firm Goodwin Procter LLP, joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Menna was asked about the unique characteristics of REITs controlled by private equity firm The Blackstone Group that have gone public in the last year.

“They’re unique in the sense that Blackstone controls the issuer,” Menna said. “Blackstone owns so much real estate that it’s pretty hard for them to raise the kind of equity capital that would liquidate their position down to a significantly small percentage of their public company. These are really and truly controlled companies, in the sense that they have a public float, but their board is controlled by Blackstone. I think that it’s a logical extension of how much real estate Blackstone owns. It’s not surprising from our perspective, and I think that Blackstone has been a pretty good steward of the use of public markets.”

Menna speculated that Blackstone intends to liquidate its positions in the companies over time.

Menna also discussed the possibility of more controlled company initial public offerings (IPOs) in the near term.

“I wouldn’t say they’re unique to Blackstone,” he said. “There have been controlled company IPOs in the traditional private-equity space for years.”

Menna also talked about some potential avenues for REITs to acquire capital outside of the traditional routes.

“I think that as the global markets expand, I think you’ll see REITs accessing capital beyond just traditional U.S. capital markets,” he said. “That’s inevitable.”

There has also been a discussion about U.S. real estate platforms forming U.S. REITs and accessing the Toronto exchange for liquidity. "There hasn’t been a lot of traction there, but there has been some traction there,” Menna said.

Menna noted that the same principle could apply to other non-U.S. stock exchanges.

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