REIT IPOs May Not Meet Expectations
03/14/2012 | by Allen Kenney

While speculation has grown that the publicly traded REIT market could see a flood of companies going public, Judith Fryer, a corporate securities attorney with Greenberg Traurig who specializes in REITs and commercial real estate, remains skeptical.

"I am by nature an optimist, so I would like to tell you that I think there's going to be a whole parade of IPOs," Fryer said during a video interview with at NAREIT's Washington Leadership Forum. "But if you're defining it in the traditional sense of a private company that is doing its first public offering, I don't think things are going to be radically different from last year."

Fryer noted that approximately 6 percent of the $37.5 billion raised via equity offerings by REITs in 2011 resulted from IPOs. She attributed the reluctance to go public to valuations.

"If you have a situation where someone doesn't need to be pricing, they're not necessarily willing to take that haircut," she said.

In the non-traded REIT sector, companies are wrestling with the possibility that the Financial Industry Regulatory Authority (FINRA) could force them to once a year, according to Fryer. "That could be a big change if you're seeing the new price for REITs on an annual basis," she said.

Regarding exit strategies for non-traded REITs, Fryer said the rejuvenation of the financing market once again makes it possible to merge them with publicly traded REITs or private companies. However, she noted that this was a popular course of action in 2006 and 2007, and that ultimately led to unsatisfying results.

"Some people may have a bad taste in their mouth from the first round, where private companies took some of these non-traded REITs and bought them at prices they're no longer happy with, which is a common story," she said.