Modest Pickup in REIT IPO Activity Possible, Investment Banker Says
06/30/2016 | by Sarah Borchersen-Keto

Greg Steele, managing director and head of REIT investment banking at Capital One Securities, Inc., joined REIT.com for a video interview at REITWeek 2016: NAREIT’s Investor Forum at the Waldorf Astoria New York.

Steele said the level of capital markets activity so far this year is “not surprising, given the backdrop of what’s been going on in the equity and bond markets.” He noted that fundamentals remain strong, along with stable cap rates, and a level of demand that well exceeds supply.

Turning to initial public offering (IPO) activity, Steele described 2016 as a “tough year.” Only one IPO has occurred so far in 2016, compared with five in 2015 and six in 2014, he pointed out.

“There’s always an ebb and flow in REIT IPO activity, but I also think institutional investors are setting a higher and higher bar for IPOs,” according to Steele.

However, Steele added that he sees the possibility for a modest pick-up in IPO activity for the remainder of the year.

On the mergers and acquisitions (M&A) front, “there still remains a very strong bid from the private equity firms to acquire REITs at below net asset value,” he noted.

“Big players have a record amount of dry powder and they continue to look for large scale platforms…there is more potential for that take-private activity to occur,” Steele said.