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LOS ANGELES-Office REITs are tapping the stock markets for funding in stock offerings that have been completed or are under way, including both publicly traded and non-traded REITs. Despite the recession and capital markets conditions that have been in turmoil, companies like Long Beach, CA-based HCP and New York City-based SL Green have been able to raise substantial funding. Los Angeles-based Kilroy has an offering under way, and in Houston, Moody National Co. has launched its first non-traded real estate investment trust.

The newest of the offerings, the one by Kilroy, is an offering of 8.75 million shares of its common stock at $20 per share, which the company expects to generate proceeds of approximately $166.7 million, before taking into account any exercise of the underwriters’ overallotment option. The offerings from other REITs in recent months have in some cases generated significantly more proceeds after the underwriters exercised their options.

In the SL Green Realty Corp. offering, for example, the stock issue yielded net proceeds of approximately $387.4 million, larger by about $50.6 million than SL Green’s initial estimate of $336.8 million. In the case of HCP, which is a health care REIT that also owns substantial medical office facilities, the company completed a $440-million public offering of 20.7 million shares of common stock at a price of $21.25 per share. HCP had said initially that it hoped to raise a minimum of nearly $383 million from the offering, but the higher figure reflected the exercise of the overallotment option by the underwriters. In the case of Moody’s, the new entity is called Moody National REIT 1 and calls for a maximum $1 billion capital raise through the sale of up to 100 million shares of common stock at a price of $10 per share.

The Kilroy offering is scheduled to close this week, subject to customary closing conditions. The underwriters for the public offering have been granted a 30-day option to purchase up to more than 1.3 million additional shares to cover overallotments. All of the shares are being sold by Kilroy Realty Corp., with Merrill Lynch & Co. and J.P.Morgan acting as the joint book-running managers.

The REITs are using the proceeds of the offerings for a variety of purposes, ranging from retiring debt to general corporate purposes to acquiring property.

The REITs have turned to the stock markets and have been able to raise funds in the stock offerings for a number of reasons. Asset sales, once a convenient way to raise money, have fallen out of favor because of the low pricing since the recession began. The stock market, however, has been generally improving of late, and some analysts say that REITs have been able to take advantage of that improvement as well as their generally better performance than some classes of stock.

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