REIT M&A Activity Surging

With the market for mergers and acquisitions heating up in U.S. commercial real estate, REITs are in favorable position to take advantage of opportunities, according to Scott Schaevitz, chairman of Americas Real Estate Investment Banking with Barclays Capital.

In a video interview with REIT.com at NAREIT's 2011 Washington Leadership Forum at the Mandarin Oriental Hotel in Washington, D.C., Schaevitz noted that publicly traded REITs have raised significant capital in the course of the last two years. Aside from tapping the common equity markets, REITs have issued preferred securities, he said. Additionally, Schaevitz said bonds spread are tightening for REITs.

"The nice thing for the public companies is that they do have an efficient cost of capital," Schaevitz commented.

Schaevitz suggested that mergers between industrial REITs ProLogis (NYSE: PLD) and AMB Property Corp. (NYSE: AMB) and health care REITs Ventas Inc. (NYSE: VTR) and Nationwide Health Properties Inc. (NYSE: NHP) are just the beginning of a number of similar deals to come. He noted that public companies could have the opportunity to buy private companies.

"There are a lot of private portfolios that are ready to be monetized," he said.

Schaevitz said the recent surge in M&A activity has resulted from a variety of factors. Some are attributable to private equity investors' "natural life cycles" as they divest assets. Additionally, restructurings are creating opportunities, according to Schaevitz. Also, public companies are ready to increase their level of acquisition activity, he said.

"The nice thing for the REIT sector is that we've really proven ourselves out the past few years," Schaevitz said. "It has been able to raise a lot of capital, and that capital is being put to work."

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REIT M&A Activity Surging

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