In: Finance
TRUE OR FALSE
The wave of privatizations of public equity REITs that occurred from 2005 through the first half of 2007 was driven, in great part, by the availability of plentiful and cheap debt capital. This trend then reversed due to the lack of debt capital following the Global Financial Crisis, and may now be repeating itself.
TRUE - Here is the Below Statement related to the Repating
REITs now trading at meaningful discounts to their net asset value, we are already seeing signs of an increase in REIT buyouts. Many of the drivers of the $100 billion-plus of public-to-private REIT M&A transactions that preceded the financial crisis are apparent again, including higher valuations in the private real estate markets than in the public REIT markets, highly liquid private markets that facilitate wholesale-to-retail executions, debt that is still both cheap and plentiful for certain transactions, large pools of low-cost private equity seeking deals (and willing to accept low cap rates), and a sizeable pipeline of REITs and REIT executives who are seeking a graceful exit. More recent trends such as the increasing interest of sovereign wealth funds and other sources of international capital in the U.S. real estate sector may also drive future REIT privatizations.