More Private Real Estate to End Up in Public Hands

Sandy Presant, chairman of the global real estate fund practice group with the law firm Greenberg Traurig, joined REIT.com for a video interview at REITWise 2013: NAREIT’s Law, Accounting and Finance Conference in La Quinta, Calif.

Greenberg Traurig has maintained a REIT industry practice since the early 1980s. The firm advises on tax and securities matters associated with forming and operating a REIT.

Presant discussed the probability of large portfolios of real estate that are held privately becoming a part of the public markets.

“All of them? Not a chance. Most of them? Probably,” he said. “What we see with our clients is that roll-ups are very important, even when they’re acquiring new things now. You can get a bigger bang for the buck when you take a whole portfolio public, merge it in through an UPREIT transaction, form your own private REIT and then become REIT bait for somebody or ultimately be an acquirer. I expect it’s going to continue.”

Presant also discussed the possibility that the Treasury Department might propose changes to bottom-loss guarantees of partnerships. Presant offered insight into what the government is considering and how it might impact those partnerships.

“It’s a good deal for the taxpayer to be able to sign on the bottom line when you have lots of assets in front of you. You really don’t have the financial risk,” he said. “The IRS is starting to close that down, or at least considering closing that down. The problem is commerce in real estate is so important now, when you have the economy in the situation that it’s in. Anything the government can do to promote that commerce should be adopted, and anything they can do to that could chill that commerce, must be left alone – and they’re not leaving it alone. That’s a real problem.”