REIT M&A Activity More Public-to-Public Than in Previous Years, Barclays Says

Ragavan Bala, managing director of real estate investment banking group and head of real estate mergers and acquisitions (M&A) at Barclays PLC, joined REIT.com for a video interview at REITWeek 2016: NAREIT’s Investor Forum at the Waldorf Astoria New York.

Bala noted that REIT M&A activity levels are generally consistent with the last couple of years, but the type of activity has changed. Whereas three to four years ago activity was mainly driven by nontraded REITs, activity in 2016 has been more public-to-public, he said.

Meanwhile, Bala said he is “cautiously optimistic” on REIT fundamentals.

“I don’t think we will see the same pace of net operating income (NOI) growth and property price appreciation, broadly speaking, that we’ve seen over the past four or five years. Having said that, I think we’ll continue to see NOI growth,” he said.

Bala also commented on a broadening of interest among foreign investors in U.S. real estate. Those investors are now looking at some of the more notable secondary markets, according to Bala. He attributes the shift to the level of prices in gateway markets, as well as the amount of capital foreign investors want to spend relative to the available opportunities.