The Real Deal New York

REITs are buying US properties at a steady clip, but selling less

SL Green remains outlier, but is spending big on share buybacks
October 24, 2017 12:20PM

From left: 16 Court Street, 1515 Broadway, Marc Holliday and One Worldwide Plaza

Listed real estate investment trusts are acquiring U.S. properties at a steady clip, but they’re selling less than they did last year.

Listed REITs bought $44.6 billion worth of assets so far this year through Oct. 23, according to data from Real Capital Analytics, the Wall Street Journal reported. That’s pretty much in line with the $47.9 billion worth of assets they bought in 2016.

But on the sales side, there’s a wider gap. Listed REITs sold $46.7 billion in assets so far this year through Oct. 23, compared to $71 billion for the full year 2016, according to RCA.

REITs have to deal with the extra challenge of deploying the proceeds from sales quickly, which can make them hesitant to sell because of a lack of attractive assets to buy.

“The question is, where are they going to invest the capital?” Sandler O’Neill and Partners managing director Alexander Goldfarb said.

One exception is SL Green Realty, which has been active selling assets like 16 Court Street in Brooklyn and negotiating to sell a stake in 1515 Broadway. The REIT also purchased a 49 percent stake in One Worldwide Plaza with RXR Realty in a deal valuing the building at $1.73 billion.

SL Green spent around $102 million during the third quarter buying back shares from a previously announced $1 billion share repurchase plan, bringing the total buyback figure to $350 million. [WSJ]Rich Bockmann