U.S. REITs raised more than $126 billion from IPOs and secondary debt and equity offerings in 2021, a new record for annual capital raising. At-the-market equity issuances for 2021: Q4 are not included in this total, so the final tally will be even more substantial.
REIT Capital market activity was further bolstered by the announcement of fifteen mergers with an aggregate transaction value of roughly $84 billion.
While REITs posted the highest volume of deal activity since 2007, the bulk of transactions were a product of established REITs seeking to strategically combine portfolios strategically to prepare for future growth. Deal activity in the data center sector was reflective of high expectations for future growth. The acquisitions of CoreSite Realty, CyrusOne, and QTS Realty Trust in 2021 accounted for $33 billion (39%) of the REIT industry total. Far from the distress transactions that were being discussed early in the pandemic, these deals reflect confidence in the business model and the outlook for the industry. Nareit maintains a list of U.S. REIT mergers & acquisitions beginning in 2004.
Capital Raising
U.S. REITs raised more than $126 billion in IPOs and secondary debt and equity offerings in 2021.
- Equity issuance totaled more than $54 billion, including $837 million raised in four IPOs, $33 billion raised through common equity offerings, $6 billion raised through preferred equity offerings, and more than $15 billion raised in at-the-market offerings. Total equity raised in 2020 was $106 billion, with $113 billion in 2019. ATM issuance data for 2021 are as of Sept. 30.
- Debt issuance in 2021 totaled $73 billion raised at the secondary market, consistent with 2020, and following $63 billion in 2019. For the year, REITs issued $12 billion in green bonds, up from $8 billion in 2020 and $5 billion in 2019.
In 2021, 57% of the capital raised came in the form of secondary debt, with 38% from secondary common equity, and 5% from secondary preferred equity. In the previous year, the breakdown was 69%, 24% and 3%, respectively. In a further sign of progress towards a full recovery, REITs undertook $6.7 billion in ATM issuances in 2021: Q3, nearly three times the amount issued in the same period in 2020.
Property Acquisitions & Dispositions
In a further note of optimism, REITs have remained net acquirors of real estate throughout the pandemic. REITs posted $15.5 billion in net acquisitions in 2021: Q3, following $18.3 billion in Q2. REITs last posted negative net quarterly acquisitions in 2018: Q4 and only twice since 2009. Health care, retail, and office led with acquisitions of $5.2 billion, $2.5 billion, and $2.1 billion in Q3, respectively. Please see Nareit’s T-Tracker for further details.
Mergers & Acquisitions
Fifteen deals to acquire public U.S. REITs were announced in 2021. Nine of the transactions, or 67% of the aggregate transaction value, represent acquisitions by other publicly traded U.S. REITs. Data centers accounted for 39% of the total deal volume, followed closely by retail at 38% and residential at 9%.
