NEW YORK CITY-It was an active year for REIT capital raises, owing in large part to the historically low interest-rate environment and given the continuation of that happy scenario, at least for the foreseeable future, the trend is sure to continue into 2013. And don’t be surprised to see more IPOs coming.
SNL Financial has revealed its list of top REIT performers for the year, and healthcare REITs clearly dominate the Top Five. In fact, Number One, with $5.6 billion in common, preferred and senior debt raised, was Healthcare REIT. HCP came in third, having collected nearly $3.3 billion in common and senior offerings; and Ventas, in the Fifth Spot, garnered $2.7 billion, again in common and preferred.
The other Top Fivers were out pof the healthcare realm, with Simon Property Group grabbing the Number Two spot with nearly $4.3 billion in common stock and senior debt. AvalonBay Communities came in fourth with nearly $3.2 billion in common stock and senior debt.
You just get “more bang for your buck when pricing is good,” CNL real estate research manager Jason Lail tells GlobeSt.com in an exclusive interview. “On the senior note front, debt rates are at at historic lows so refis are very appealing.” He reminds us that average interest rates, which hovered at around 7% before the recovery were at the end of 2012 at about 5.35% “That’s a dramatic downtick in interest rates. Cheap debt is a strong driver for capital raises.”
The stage is also set for IPOs and, given the popularity of specialty REITs coming online in 2012, such as Silver Bay, with its focus on single family, Lail tells GlobeSt he wouldn’t be surprised to see more of the same. “We’re hearing rumors about infrastructure REITs.”
In an article published by SNL earlier in the year, the fir reported that “Apart from Silver Bay, the other five REITs to IPO in 2012 have all outperformed SNL US REIT Equity index. Retail Properties of America Inc., which completed a $293 million IPO on April 4, continues to lead the way with a 56% total return since its completion date, 46.6 percentage points above equity index return over the same period.
“The other four IPOs of 2012, AmREIT Inc., Spirit Realty Capital Inc., Wheeler Real Estate Investment Trust Inc. and Select Income REIT, also beat the SNL US REIT Equity index, by 21.7 percentage points, 12.8 percentage points, 5.8 percentage points and 3.6 percentage points, respectively.”