Public non-listed REITs continue strong acquisition course
Non-traded REITS continue to acquire properties and make investments – and the trend seems to be strengthening.
From the article:
Non-traded REITs had a strong year for investment in 2014, and they’re on track for an encore. According to SK Research’s “Non-Traded REIT Market Intelligence Report,” which was released in August, non-traded REITs have a hearty appetite for acquisitions. In 2014, they acquired $21 billion in core commercial real estate.
According to Real Capital Analytics Inc., investment volume totaled about $9.3 billion in the first quarter. Assuming a strong finish, non-traded REITs are likely to match or exceed last year’s acquisition totals. In the early going this year, sponsors made the biggest splash in two sectors: Hospitality drew $2.2 billion in investment during the first quarter, followed by office assets, with acquisitions valued at $1.1 billion, SK Research reported. American Realty Capital Hospitality Trust dominated its category, tallying $1.8 billion in volume. The $350 million in acquisitions completed by Hines Global REIT topped the office category.
An open question is this: how long until the larger institutional buyers start to move down the food chain into the smaller deals, or portfolios of smaller deals? At some point, the spread between the cap rates on sub-$5,000,000 properties and those on larger properties will likely converge, which will benefit the portfolio that PGP is slowly building.