Why Private REIT Acquisitions Are Becoming Wildly Popular

Private REIT acquisitions are on the rise. Investors are showing increasing interest in acquiring private REITs, which have a variety of real estate holdings. These transactions are very different from standard real estate deals, but they also have significant benefits.

“If real estate investors want to include in their potential acquisition lists the expanding amount of real estate assets held by private REITs in the U.S., they need to be familiar with the ins and outs of acquiring a private REIT, which is a very different transaction from a traditional real estate purchase and sale,” Ben Fackler, a partner at Allen Matkins, tells GlobeSt.com. “And for both buyers and sellers it’s important to understand those key transactional differences in advance, in order to optimize the acquisition process and reduce potential frictions and busted deals.”

Private REITs are particularly popular in a low-yield environment. “Private REITs have long been preferred tax-advantaged yield vehicles, and have increased in popularity as an asset class in the low-yield environment we have found ourselves in since the global financial crisis,” Max Brunner, senior counsel at Allen Matkins, tells GlobeSt.com. “Adding fuel to the fire, in December 2015 Congress passed the Protecting Americans from Tax Hikes Act, which has channeled an increased amount of foreign investment in U.S. real estate into private REITs.”