Potential for REIT IPOs Limited, Menna Says

Gil Menna, partner with the law firm of Goodwin Procter, joined REIT.com for a video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.
Menna was asked about the potential for more REIT initial public offerings (IPOs). He said he views the opportunities as being limited.

“Broadly speaking, I think limited in the context of prior years,” he said. “My sense is that perhaps maybe Brixmor will be coming out to the markets. Archstone obviously was sold and didn’t go out to the public markets. So, with the exception of the American Homes 4 Rent single-family market, I would say there’s not going to be likely a lot of activity.”

Menna also offered his opinion on the outlook for private portfolios going public.

“You really need a platform,” he said. “Obviously, some of the single-family residential property companies have strong platforms. Some of them are externally advised. Homes 4 Rent is not. If you take a look at some of Blackstone’s portfolios, for example, on the office side, the question is what management team would be around that portfolio to affect a successful initial public offering (IPO). I think that there’s more likely to be trades into the existing public market, or possibly even foreign capital coming into the U.S., which was significant last year.”

Goodwin Proctor represented apartment REIT MAA (NYSE: MAA) in its recent deal with Colonial Properties Trust (NYSE: CLP). The combined company is projected to have a total market capitalization of $8.6 million. Menna talked about the potential impact the deal might have on the market.

“That was a unique transaction, an exciting transaction for MAA,” he said. “I don’t think the MAA and Colonial transaction necessarily bodes for significant activity in the REIT M&A space. At the NYU conference a handful of us were sitting around the table wondering whether or not there would be one, two, three major business combinations in the sector this year, and people were all over the map on that question. I think that there are still logical combinations, but they are few and far between.”