Market Waiting for Big-Name REIT IPOs

The theme of the recent Georgetown University McDonough School of Business and NAREIT Spring 2011 Real Estate Luminary Series was “Commercial Real Estate: Moving from Recovery to Expansion.” Martin Cicco, senior managing director with Evercore Partners, said the market has come along way in a very short period of time.

“You’ve had two different markets. The public companies have been able to recover given their access to capital in a multitude of ways, much quicker than the private market has,” Cicco, who participated on a panel at the event, said. “I’m not sure what inning we are in, but it has been a very rapid game.”

How far and how fast the recovery continues to travel depends on the economy, Cicco said. The hotel and apartment businesses have shown strong recovery, and the retail and office sectors are improving as well, Cicco said.

“But that all falls back to the economy. What you have out there is a very low interest rate environment, and when it turns that will be the real judgment point for the marketplace,” Cicco said.

Looking at the REIT initial public offering market, Cicco said the market has been selective. He added that the market is likely waiting for some of the bigger potential IPOs (Archstone, Hilton, Equity Office Properties).

“The last wave when we saw this in the early 1990s, the existing companies we have today did not exist, so there were a lot of companies that came to the IPO window without that competition,” Cicco said. “This cycle you will clearly see some of the existing public companies, as a prelude to the IPOs, make some bids.”



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