07/08/2013 | by
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It was a quiet first half of 2013 for REIT mergers and acquisitions. Industry analysts interviewed by REIT.com agreed that activity in the second half of the year will likely remain slow.

Jim Sullivan, managing director and analyst at Green Street Advisors, characterizes the state of M&A as a two-to-tango situation.

“Lots of industry participants enjoy speculating about who is next, but the reality is that without a willing seller, it’s hard to make a deal,” he said. “And you just don’t find many willing sellers in the REIT industry.” 

Sullivan said that the triple-net lease sector has seen the most action during 2013 so far. He expects to see more M&A activity in that sector.

However, Sullivan said M&A will likely remain dormant in other property sectors.

David Toti, senior managing director with Cantor Fitzgerald, said he’s usually not a big fan of public-to-public mergers from a pricing perspective. He added that he doesn’t anticipate that the industry will see an abundance of those transactions in the near future.

“My view is if REITs continue to trade off, we could see private capital come in and take the capital out,” Toti said. “There will be a big arbitrage between private value and public.”

Mark Decker Sr., managing director with BMO Capital Markets, holds a more bullish view of the M&A outlook. In a video interview with REIT.com, he noted that the market was more active prior to the financial crisis in late 2000s. This year, he said he does anticipate an uptick in M&A activity in the second half.

“Mergers are typically synergy-related and require more than stock price valuation differences,” he said. “But, as the market normalizes a little bit, I think we’ll see more.”

One major exception to the generally quiet first half was the deal struck between MAA (NYSE: MAA) and Colonial Properties Trust (NYSE: CPT). In June, the companies announced an agreement to merge. The $8.6 billion transaction is expected to close in the third quarter of 2013.