Current conditions could be right for de-listing some REITs

Now could be the time for transactions such as taking a listed company private, seeking a capital injection or grabbing a joint venture opportunity according to Green Street MD advisory and consulting Jesse Freitag-Akselrod.

In particular there may be opportunities in UK retail, or under-loved and deeply discounted continental office portfolio, or a situation in the German residential markets.

“For the listed sector in particular, I think one obvious thing is that the whole market is perceiving really deep discounts to NAV,” Freitag-Akselrod said, adding that these discounts are most pervasive in sectors like German residential, continental offices and UK retail.

“Notably, they’re usually also coupled with very high leverage,” he said, explaining that these situations could be perceived as REIT investors’ capital markets punishing REITs for being over levered and excessively risky.

From another perspective they can be seen as an opportunity, he added.

While there are numerous examples of sophisticated capital such as Brookfield, Blackstone and Henderson Park taking private deeply discounted names when public markets found them less appealing, he said that capital “wanes and waxes” into and out of the public sphere.