Robin Panovka, partner at Wachtell, Lipton, Rosen &Katz, participated in a video interview during Nareit’s REITwise: 2024 Law, Accounting & Finance Conference held March 19-21 in Hollywood, Florida.
Focusing on the mergers and acquisitions (M&A) landscape for REITs this year, Panovka expressed cautious optimism, highlighting the unpredictability surrounding the market's trajectory. "Last year was surprisingly robust... but about half of 2022 (levels)." The discussion revolved around whether 2024 would resemble the buoyancy of 2022 or the slowdown experienced in 2023, with the consensus being somewhere in between. Panovka identified two pivotal factors driving this uncertainty: interest rates and the bid-ask gap between buyers and sellers.
Regarding the potential uptick in deals, Panovka emphasized the role of interest rates, stating, "If interest rates continue to moderate, I think you'll see private equity back in the game." He underscored how private equity's absence in 2023, due to high capital costs, hindered deal flow. Additionally, he addressed the prevalence of activist actions within the REIT space, noting a shift away from the traditional narrative of selling assets for profit.
Looking ahead, Panovka predicted three major themes for REIT M&A in 2024: continued consolidation driven by the advantages of scale; an increase in stock-for-stock deals; and a resurgence of private equity involvement.