New private REIT reveals trend

May 26, 2011 09:05AM

A newly launched private real estate investment trust based in Scottsdale Ariz. reveals a major shift in the REIT world, according to the Wall Street Journal. Commercial real estate veterans Christoper Volk and Morton Fleishcher, who co-founded Spirit Finance, a REIT focused on single tenant retail buildings, in 2003, have raised $500 million in the private market to form a REIT that will invest in supermarkets, drug stores and restaurants.

Store Capital, the private REIT, is the result of a public market hostile to investments trusts, particularly blind-pool REITS, or companies that have zero concrete assets. These types of REITS have been almost entirely shut out of initial public offerings as a result of investors playing it safe.

The company secured $400 million from Oaktree Capital Management, an L.A.-based firm, but declined to comment on where the remainder of the money came from.

“We elected to do this privately because we believed it to be the most efficient,” Volk told the Journal. “Plus, one is dedicating oneself from the outset to one source of capital, whereas private capital comes in more varieties.”

“Now is a great time to address the large need for companies to efficiently finance their operational real estate,” he continued. “This is especially true for middle market companies, where bank financing is less available.” [WSJ]