Banker Foresees More REIT Privatizations in Near Future

Vick Seth, vice chairman of investment banking with Raymond James, joined REIT.com for a video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

Regarding trends in the real estate capital markets, Seth noted the recent retreat in REIT shares prices and upturn in volatility. However, neither has slowed capital formation in the public or private markets, according to Seth.

“At the end of the day, we have a pretty robust fundamental backdrop,” he said. “I think there is plenty of capital looking for a home, so I expect that we’ll continue to see an upwardly mobile trend.”

Seth also offered his thoughts on private capital’s pursuit of public real estate portfolios. He said he believes promising public REITs with “uncooperative” stock prices will become targets of private players. Additionally, he pointed out that the market is moving toward more consolidation and specialization.

“I expect that if we do see prices mismatched between the public and the private markets as much as we’ve seen right now,” privatizations will continue, Seth said.

Conversely, Seth commented that he expects spinoff activity will trail privatizations. Spinoffs make sense for large REITs with “interesting” sub-portfolios, according to Seth. Furthermore, he said he expects more companies will continue exploring the possibility of converting to REITs.

However, “the talk in those two segments is significantly more than the action,” Seth stated.