BMO Banker Sees Strong Investor Support in Real Estate Capital Markets

Mark Decker Jr., group head of U.S. real estate at BMO Capital Markets, joined REIT.com for a video interview during REITWise 2015: NAREIT’s Law, Accounting and Finance Conference held in Phoenix.

Decker discussed the state of the real estate capital markets.

“They’re in great shape,” he said. “There’s a lot of access to all the markets. Pick your flavor. If you’ve got a good use for the money, there’s a lot of investor support,” he said.

Decker also said he expects to see a continued spike in mergers and acquisitions (M&A) activity. Activity will be comprised predominantly of public purchases of private portfolios, he said, although large public-to-public deals are also likely to continue.

Decker also said many of the components for increased privatization of real estate assets, such as a robust debt market, are already in place. “Today, privatization for a smaller cap company under $5 billion is there,” he noted. A case in point is Blackstone Property Partners L.P.’s recent announcement that it had agreed to purchase retail REIT Excel Trust, Inc. (NYSE: EXL) in an all-cash transaction valued at approximately $2 billion.

Decker explained that there are fewer private equity firms today compared with the last wave of privatizations in 2006, but the ones still around are larger. As a result, “there’s more capital today,” according to Decker.

“That’s going to drive a lot of activity,” he said. “To the extent that a company looks cheap on a relative basis…those companies are going to be in play,” he said.