REIT deals hampered by share price drops

New York /
Jun.June 28, 2013 12:00 PM

After a heady year that has seen almost $36 billion worth of deals to date, real estate investment trusts are likely to scale back on their acquisitions, following a drop in share prices that has made financing more costly, Bloomberg News reported.

The Bloomberg REIT Index has dropped 11 percent from an almost six-year high in May after speculation that the Federal Reserve would begin to reduce bond purchases, which have kept borrowing costs low. The decline was three times the slump seen in the Standard & Poor’s 500 Index, signifying the extent to which REITs rely on share sales to finance acquisitions.

Just five U.S. property REITs have sold shares this month, down from 14 in May, according to Bloomberg data.

Total year-to-date purchases were double the $17.6 billion seen a year earlier, the data shows, driven by Equity Residential and AvalonBay Communities’ $16 billion deal for Lehman Brothers Holdings’ Archstone apartment portfolio.

“For most property types, I think we’ve hit the pause button,” Jim Sullivan, a managing director at real estate research firm Green Street Advisors, told Bloomberg. “We’re going to see a period here where REIT executives are very careful in what they do with respect to new acquisitions.” [Bloomberg News]Hiten Samtani


Related Articles

arrow_forward_ios
Equity Residential chairman Sam Zell (Getty, iStock)
Sam Zell’s Equity Residential reports recovery in rental occupancy
Sam Zell’s Equity Residential reports recovery in rental occupancy
Federal Reserve Chair Jerome Powell (Getty)
Traders eye Fed pullback on mortgage bonds
Traders eye Fed pullback on mortgage bonds
Jerome Powell (Getty)
Powell sees new opportunity to reform low-income lending rule
Powell sees new opportunity to reform low-income lending rule
Equity Residential chairman Sam Zell (Getty)
Equity Residential sees profits drop 58%
Equity Residential sees profits drop 58%
Fed Board Governor Lael Brainard (Getty, iStock)
Fed wants banks to step up lending in low-income areas
Fed wants banks to step up lending in low-income areas
Fed Reserve Chairman Jerome Powell (Getty)
What low interest rates through 2023 means for real estate
What low interest rates through 2023 means for real estate
The rates for a 30-year fixed-rate mortgage dropped 7 percentage points for the week ending September 10, reaching 2.86 percent. (iStock)
Mortgage rates notch new low
Mortgage rates notch new low
Federal Reserve Board chairman Jerome Powell (Photos by Samuel Corum/Getty Images; iStock)
Fed signals low rates are here to stay
Fed signals low rates are here to stay
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...