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David Bonser, global managing partner of the corporate practice and global co-head of the REIT practice at Hogan Lovells, was a guest on the latest episode of the Nareit REIT Report.
Bonser discussed the current state of the capital markets for REITs and the most popular methods for raising capital.
“You are seeing people lock in to raise debt capital because they've held off for a couple of years, and you do need to get your debt balance sheet in order, so we're seeing a lot of activity there,” Bonser said.
He added that equity investors in the REIT space want to see an identified use for capital, “and acquisitions are still a little too episodic to justify raising equity capital. But we are starting to see more movement there and I think the hope is the second half of the year…that we're going to see more activity there.” Joint ventures, meanwhile, remain a strong option for raising capital, according to Bonser.
During the interview, Bonser also discussed:
- The outlook for IPOs. “I don't think we're going to see a flood of activity in the IPO market, but I do think that we're seeing certainly more inquiries than we have in the past, and that's exciting.”
- Key dynamics between public and private real estate: “The ability to access the debt capital markets is a unique feature for public company REITs that is much more challenging for a private company REIT to do.” He added that signs look “pretty bullish” for public REITs in the second half.
- M&A activity: “There's a sense in the market, certainly talking to our investment banking clients, that increased M&A activity is likely to happen in the second half of the year… I think the real focus is what is going to happen with more challenging asset classes?”