REIT IPOs Vanish As CRE Chooses Private Capital Over Public Markets
The world of REITs is shrinking, and not just because of increased consolidation in the sector.
Companies went into hiding following 2022’s increase in interest rates. There were no initial public offerings that year, the first time in 21 years.
IPO activity has remained subdued since, despite interest rates falling, returns broadly increasing and fundraising activity on the rise, according to Nareit data. With an excess of private capital on the sidelines, players old and new may see no need to go public anytime soon.
“There will always be a public real estate market,” PwC Global Real Estate Deals Leader Tim Bodner said. “But to be a participant in that market, I think you need to have a unique story and you have to have scale.”
There were also no new REITs in 2023. There were three IPOs in 2024, but activity fell again last year, despite the recovering market, with just one new public REIT.
By comparison, 80 new REITs listed between 2001 and 2010 for a combined value of around $21B. Activity peaked in 2004, when 29 went public, raising a total of nearly $8B.
The only real estate firm to go public last year was Fermi America, a data center-focused REIT co-founded by former U.S. Energy Secretary Rick Perry and Quantum Energy Partners’ Toby Neugebauer. It didn’t begin trading until October, when it listed at $21 per share. The IPO raised $785M in gross proceeds, according to Securities and Exchange Commission filings.
Fermi’s stock price has been on a downward slide since, losing nearly 70% of its value. Even so, the firm is largely focused on enhancing the power grid, making it arguably more of an infrastructure REIT.
Data centers have generated a meaningful amount of public hype and are rapidly scaling, theoretically making companies in that space prime candidates for IPOs. Yet there are fewer options for traders on Wall Street now than five years ago.
A wave of acquisitions in 2021 and early 2022 took four of the most prominent data center operators off the market. Blackstone acquired QTS Data Centers for $10B in June 2021. Two more deals totaling $25B came months later when American Tower bought CoreSite and CyrusOne sold to KKR and Global Infrastructure Partners. Then, DigitalBridge and IFM Investors took Switch Data Centers private for $11B in 2022.
There are just two major, pure-play data center REITs today: Digital Realty Trust and Equinix.
“Do we really need more? Are they going to have a differentiated equity story? Are they going to generate a meaningful total share of the returns?” Bodner said. “If the answers to those things are yes, then it's possible. But I think it's more likely that you'll see private recapitalization continuation vehicles or some other thing done in the private markets versus the public markets.”
While public REITs raised nearly $80B in 2025, $3.6B more than in 2024, momentum has slowed. Even with interest rate cuts, companies raised just $6.7B in the fourth quarter, according to Nareit.
Of the Q4 total, debt issuance was the primary funding source at $5.1B. Common equity offerings raised $892M, and $750M came from preferred equity offerings.
Although the S&P U.S. REIT index shows the overall sector has managed to recover its losses in 2022 and 2023, many public landlords continue to claim to be undervalued as real estate undergoes a price reset.
On Monday, Orion Properties became the latest to announce a strategic review after fending off a private equity takeover for months. Acquisitions ticked up last year, with three major public-to-private deals closing — Plymouth Industrial REIT, Sotherly Hotels and Alexander & Baldwin — according to Nareit.
Other take-private deals, such a Morning Calm Management affiliate's purchase of City Office REIT, have been announced but are still in the works.
With a significant amount of dry powder on the sidelines and asset managers pursuing rapid growth, the number of mergers and acquisitions is only expected to increase. PwC estimates U.S.-based private equity funds held about $880B in available capital as of September, although that money isn’t necessarily dedicated to real estate.
Other investors, such as family offices and high net worth individuals, are also increasingly directly targeting commercial real estate investments, giving companies less of a reason to go public.
“You have shifting capital markets, where retail investors, who would traditionally participate through the public REITs, are able to get exposure to the sector in the private markets without the volatility,” Bodner said. “You ask yourself, ‘If I can get a capital solution in the private markets, why would I subject myself to being a public company and incurring the costs?’”
