'Everybody's In The Game' As REIT M&A Picks Up Steam

Investors have announced plans to spend roughly $3B to take three REITs private since September. It’s a modest sum in the $1T-plus REIT market, but after more than a year of relative stagnation in the REIT merger and acquisition space, it could signal that the dam is finally breaking. 

Activity has ticked up in the back half of the year as well-funded firms with debt at their fingertips hunt for deals. Two REIT acquisitions have crossed the $1B mark in the last three months, and rumors are swirling about other potential big-ticket trades, laying the groundwork for what is expected to be a more active 2026.

“There's access to capital, access to debt capital, period, full stop. The banks are back,” Green Street Global Head of Advisory Services Dirk Aulabaugh said. “Everybody's in the game.” 

Buyers and sellers are coming to the table as the debt landscape markedly improves from the start of the year, when capital was not just expensive but also hard to find. 

The largest deal since September came when Ares Alternative Credit agreed to pay $2.1B in cash for Plymouth Industrial REIT, the owner of 226 buildings across 10 markets. The Ares offer represented a more than 40% premium on Plymouth’s value from when it received an unsolicited $1.1B takeover bid in August from Sixth Street Partners. 

The Sixth Street buyout had been approved by Plymouth’s board with 30 days to look for a better deal, which Plymouth found with Ares. The new deal is set to close early next year after another 30-day “go-shop” window.  

The rising price tag reflects the wide gap between public and private asset valuations in some sectors. While tech firms have banner years on the back of the boom in artificial intelligence demand, REITs and publicly traded commercial real estate companies have fought to shake off pandemic-era narratives around office and retail demand, fears of oversupply in some asset types, and the whipsaw impacts of tariff policies. 

Valuations were depressed at the start of the year, but some REIT managers had hoped that momentum building at the end of 2024 would lead to a broader recovery. But the rebound hasn’t materialized at scale, said Kristin Gannon, co-head of Eastdil Secured’s corporate advisory and M&A group.  

“There’s a little bit of a thought that these [discounts] are persisting, and that leads executives at the REITs to reconsider whether it makes sense to be a public company,” she said.

The second deal to cross the $1B mark since September reflected that persistent pricing gap, although governance issues also led office REIT Paramount Group to accept a take-private offer with a price tag well below its valuation. 

Rithm Capital agreed to pay roughly $1.6B to acquire Paramount Group in September, several months after the office REIT told investors that $4M in previously undisclosed payments to businesses associated with Paramount’s then-CEO, Albert Behler, and his wife had drawn an investigation from the Securities and Exchange Commission. 

Paramount’s investors are set to receive $6.60 per share in the buyout, below the REIT’s $7.39-per-share value at the time the deal was announced but ahead of its trading floor of around $4.50 per share, where it had been trading for much of 2023 and 2024. 

Blackstone, SL Green and Vornado all reportedly bid on the REIT, but the sale price for Paramount’s 13M SF worth of office space in New York City and San Francisco still fell well short of a $12-per-share offer from Monarch Alternative Capital that Paramount’s board unanimously rejected in 2022. 

Luxury lodging REIT Sotherly Hotels announced a third, smaller deal in October that would lead it to be taken private at a 153% premium to its stock price.

REITs as a sector have a more than $1.3T market capitalization, with investors trading more than $9B worth of REIT shares daily, according to JPMorgan Chase. In the context of the broader market, the takeovers barely register. 

“The dollar volume is not startling,” said Collete English Dixon, who left a 20-year career at PGIM in 2016 to lead the Marshall Bennett Institute of Real Estate at Roosevelt University in Chicago. “It's a bunch of transactions — more than we've seen in a while — but the dollar volume isn't knocking my socks off.”

There are big-ticket deals reportedly waiting in the wings, the largest of which is the expected $40B acquisition of Aligned Data Centers by BlackRock and MGX, an AI fund backed by the United Arab Emirates. The deal hasn’t closed, but Aulabaugh and Gannon said it is widely expected to get across the finish line. 

Similarly, Brookfield is reportedly considering paying more than $10B to acquire Yes Communities, a manufactured housing REIT, from Singapore’s sovereign wealth fund, GIC. 

The status of those negotiations isn’t public, and both deals could fall through. But Aulabaugh said there is a growing contingent of buyers who are pressing pause in the fourth quarter, waiting to see if the Federal Reserve cuts rates again in December and what the macroeconomic landscape looks like in the first quarter.

“It's not just Blackstone and Brookfield and some of these other big firms. There’s dozens of companies that have raised billion-dollar funds or more,” Aulabaugh said. “The amount of capital that is in real estate today — it's just different than it was 10 or 15 years ago.”

While the year started in a tight lending environment, debt is widely available today. Banks have returned to underwriting loans and are competing with private equity looking to deploy billions of dollars, sometimes spread across multiple funds and sometimes with a ticking clock before capital has to be returned to clients.

“Banks are using their balance sheet,” Gannon said. “I would say we have a very attractive debt market for people to get what they need.”

BlackRock’s push to pick up Aligned is part of a rush of capital into data centers as tech and utility giants spend record sums to build out the infrastructure to support the expected wave of way-of-life-altering AI. 

On the other side of the M&A and sentiment landscape, there are firms looking to buy multifamily REITs as their values are dragged down by weakening rent growth and questions about oversupply. 

Technology REITs are trading at a 0.7% premium to their net asset value, according to JPMorgan Chase. Healthcare REITs, led by market winner Welltower, are trading at an 89% premium and are joined by triple-net lease and regional mall REITs, at 7.7% and 6.1%, respectively, as the only sectors priced above NAV. 

On the negative side of the ledger, lodging REITs fare the worst at a 27% discount, followed by multifamily and office at 19%, and strip center retail at 17%. Public valuations for multifamily assets have outperformed the private market, creating potential opportunities for funds looking to take a REIT private. 

The performance of strip center REITs is also highly variable, depending on the assets. Houston-based shopping center owner Whitestone REIT has been fending off multiple takeover bids from MCB Real Estate this year, including an offer this month to buy the firm at a 21% premium to its share price. 

Even large public firms are likely to become buyout targets next year if the pricing gap persists, simply because of the amount of capital that’s been raised. 

“There's big and then there's huge,” Aulabaugh said. “There's some huge REITs that — maybe not. But the big ones, call it under $10B, I think that those deals can get done.”