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There Were No REIT IPOs In 2022 For The First Time In 21 Years


It has been a brutal year for publicly traded commercial real estate owners on Wall Street, so much so that an ignominious milestone was reached for the first time in more than two decades.


No companies have filed to become a public real estate investment trust in 2022, the first time that has happened since 2001, a spokesperson for REIT industry group Nareit confirmed to Bisnow.

The industry has faced gale-force headwinds, due in large part to the Federal Reserve’s aggressive interest rate hikes. The FTSE Nareit All-REIT index, which tracks the performance of all U.S. REITs, is down more than 25% so far this year, significantly underperforming the S&P 500's 16% drop. 

REIT IPOs have been diminishing for a handful of years as more real estate companies look to the private market to raise capital in order to avoid the volatile pitfalls Wall Street can deliver.

“You’re seeing public companies go private, but you’re not really seeing private companies go public,” Green Street senior associate Jared Giles said. “It’s a one-way street right now.”

There were four REIT IPOs in 2021 that raised a combined $830M, according to Nareit data. The drop from four to zero reflects the reality that the IPO market overall on Wall Street has decelerated this year, with the number of new offerings down more than 85% year-over-year, Credit Suisse Managing Director Tayo Okusanya told Bisnow.

But there are structural reasons landlords haven't looked to go public. Publicly listed REITs in the U.S. traded at an average 19% discount to their net asset value as of August, according to S&P Global Market Intelligence. On top of that, rising debt costs have given rise to a raft of questions about real estate values, which has frozen both credit and investment sales markets

“We haven’t had a robust IPO market for REITs for several years,” said David Bonser, global managing partner and head of the REIT practice at the law firm Hogan Lovells. “It has become a relatively mature industry.”

The high-water mark for REIT IPOs this century came in 2004 when 29 REITs went public and raised nearly $8B combined, according to Nareit.

IPO numbers bounced up and down over the ensuing years, falling into single digits with the exception of 2013, when 19 firms filed for REIT IPO status, raising more than $5.7B combined. There were four IPOs in both 2020 and 2021 after the previous nadir of two IPOs in 2019.

Many longstanding REITs have been taken private, shrinking the overall pool of publicly traded firms. This year alone, Blackstone acquired REITs American Campus Communities and PS Business Parks for more than $20B combined, and industrial REIT Prologis acquired competitor Duke Realty for $26B. 

“Right now, based on what we’ve seen, it’s as though REITs are benefiting more at the moment by remaining private,” Moody’s Analytics Senior Economist Ermengarde Jabir said. 

Historically, when the stock market does well, REITs outperform. But the same is true when the opposite happens, Jabir said. 

“REITs are trying to avoid market volatility,” she said. “As we’ve seen this year, there have been market swings in both directions."

Bonser said investors have become more “skittish” about investing in REIT IPOs rather than continuing to invest in some of the legacy REITs that have a proven track record. 

“Why should I buy stock in your company versus the other 18 that are already being traded?” Bonser said. “What compelling argument are you going to make to me that tells me I need to own your stock versus some of these others? That's a tough hill to climb.

“[An investment manager] can’t get fired for deciding to invest in Simon Property Group if they want to take a contrarian view on malls or invest in an industrial REIT, but an investment into a company that has not yet proven its business model, that’s a harder trigger to pull.”