SEPTEMBER ISSUE: Non-Listed REITs

A number of epic deals signal the growing maturity of non-listed REITs.
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KBS REIT II’s $108.7 million sale of Metropolitan Center in East Rutherford, N.J.

As fall approaches, supersize deals are starting to show up on the real estate calendar. Before the year is out, NorthStar Realty Finance Corp. expects to close on its $4 billion acquisition of Griffin-American Healthcare REIT II Inc., a non-traded vehicle co-sponsored by American Healthcare Investors and Griffin Capital Corp. Also scheduled for a fourth-quarter closing is Ventas Inc.’s $2.6 billion acquisition of American Realty Capital Healthcare Trust Inc., which was announced in June.

Along with the demand for healthcare properties and the abundance of investors eager to allocate capital, these epic deals signal an additional trend: the growing maturity of non-listed REITs. During the first quarter of 2014, the sector attracted close to $4 billion, a 7.2 percent year-over-year increase, according to research by Robert A. Stanger & Co. The Shrewsbury, N.J.-based investment banking firm, which specializes in direct investment securities, estimates that 43 non-listed public REITs are registered to raise $62 billion in equity capital.

Much of that capital is originating from repeat investors. As non-traded REITs produce healthy proceeds, their investors are willing to plow more capital into the sector, the Stanger report explained. Those returns stem from exit strategies that fall into several major categories: the sale of the fund to its sponsors, to a traded REIT or other investors, or through an initial public offering on a stock exchange.

Read the full article in the September 2014 issue of CPE. Access is free!