Climate Improves for Potential Retail REIT Initial Public Offerings

Climate Improves for Potential Retail REIT Initial Public Offerings

After a challenging start in 2010, this year is looking to be a better bet for REIT initial public offerings.

Today, many firms are looking at increasing the pace of their acquisitions, as the investment sales market shows renewed vitality. To finance those transactions, some would like to tap public equity and debt. Many firms had a similar thought last year and planned IPOs, but had to back off after getting chilly receptions from investors concerned about retail real estate’s outlook. But things are looking up in 2011, which could translate into more retail REIT IPOs.

“I think there were a lot of guys who wanted to go public [last year] but didn’t, because they didn’t think the conditions were right,” says Rich Moore, an analyst with RBC Capital Markets. “Today, there is recognition that commercial real estate will be fine, if not great. The retail guys are definitely going to think about IPOs.”

Last week, for example, American Assets Trust Inc., a San Diego, Calif.-based firm that specializes in retail and office properties, sold 27.5 million initial shares at a price of $20.50 apiece, raising approximately $563.8 million. American Assets’ shares priced at the higher end of its expected range, which was initially set between $19 and $21. The transaction was also the largest REIT IPO in more than a year.

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