Brooklyn developer David Bistricer is forming a real estate investment trust to fund future acquisitions, The Real Deal has learned. Bistricer, who’s made a series of major acquisitions in recent years with frequent collaborator Joseph Chetrit, said he has raised $144 million in equity so far.
The REIT is to be called Clipper Realty Inc., according to regulatory filings. It will be listed on the New York Stock Exchange sometime in the “next few months” with a focus on “strategic, value-add” investments,” Bistricer told TRD in an interview Tuesday.
Some of Clipper’s current assets may be folded into the REIT, he added, but declined to say which ones. Clipper’s portfolio includes trophy towers such as the former Sony Building at 550 Madison Avenue and the former Cabrini Medical Center in Gramercy, both condominium conversion projects owned in partnership with the Chetrit Group.
The lion’s share of the equity raised would be used for “future acquisitions,” Bistricer said.
The Chetrit Group is not involved in the formation of Clipper Realty Inc.
According to regulatory filings, the REIT will have three independent directors, including Robert Ivanhoe, chair of the global real estate practice at Greenberg Traurig and co-chair of the firm’s REIT group; Howard Lorber, chair of Douglas Elliman and CEO of its publicly-traded parent company, Vector Group, and Robert Verrone, founder of real estate finance advisory Iron Hound and a former co-head of Wachovia Bank’s real estate group. Executives listed are Bistricer’s son J.J. Bistricer, Lawrence Kreider Jr., former CFO of Cedar Shopping Centers, and real estate investor Jacob Schwimmer.
Weighing in on Clipper Realty Inc.’s potential, Ivanhoe said: “That’s to be determined. As long as you’re able to find good opportunities, you keep buying and growing and buying and growing.”
Overall, there are several advantages to forming a REIT, including the opportunity to receive special tax considerations in exchange for larger returns to shareholders. There’s also greater access to cash.
“Going public for a real estate platform not only gives the company greater access to capital,” said Sandler O’Neill + Partners analyst Alexander Goldfarb. “It also gives them a way to cash out or redeem existing investors.”
There were more than 200 publicly traded REITs in the United States at the end of 2014, with a combined market capitalization of $907.4 billion, according to REIT.com. That’s up from 120 REITs with a market capitalization of $11.7 billion in 1989.
REITs are, however, finding profitable investment opportunities harder to come by in New York City, with yields getting compressed.