05/24/2012 | by
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REIT transaction activity has been busy the first half of the year due to the continued access REITs enjoy to the capital markets, according to John Rayis, partner with Skadden, Arps, Slate, Meagher and Flom LLP.

He said the public capital market is even starting to warm for new offerings for existing REITs and new mortgage REITs causing increased activity in the IPO market, including Western Asset Mortgage Capital Corporation (NYSE: WMC) which held its initial public offering (IPO) last week.

"I would say things are still extraordinarily busy right now," Rayis said in an interview with REIT.com, adding that his firm has been involved in recent IPOs as well as follow-on offerings.

The firm was also involved in the IPO for ARES Commercial Real Estate Corporation (NASDAQ: ACRE) two weeks ago and the AG Mortgage Investment Trust (NYSE: MITT).

Rayis attributed the increased activity to investors' appetite for REIT shares in the current market climate.

"I think people view REITs' yield play and the nature of their investment as healthy investments," he said. "Earlier this year we did a $2.1 billion common stock offering for American Capital Agency Corporation. It's been a very healthy time right now for capital markets to open back up again to new offerings."

In terms of mergers and acquisitions, Rayis said while last year was an extraordinarily heavy year for REIT M&A, activity is continuing with a handful so far this year including the one in which Ventas Inc. (NYSE: VTR) acquired Cogdell Spencer in a $217 million transaction. Additionally he has noticed a large number of real estate joint venture type transactions.

"One was the $4.8 billion joint venture transaction between Westfied America and the Canadian Pension Plan Investment Board for 12 centers," he said. "There was also recently a Westfield and Starwood joint venture in which Westfield sold eight malls to Starwood for $1.1 billion."

"I don't see any reason why these big trends won't continue," he said.

Among other trends, Rayis anticipates that the industry will see more non-traditional real estate asset types, such as cell towers as residential homes, continue to enter the REIT space.

However, he said that while there has been a substantial amount of capital market activity in the space, the capital markets have not opened up for everyone. He noted this is especially true for less-established, smaller REITs looking to go public.