Retail Landlords Sell Assets To Raise Cash

More real-estate assets owned by publicly listed REITs are up for sale as the gap widens between their discounted share prices and the value of private-market transactions of physical assets. Shares of real-estate investment trusts have underperformed the broader equity market for the third year running, in part because of rising interest rates, which cause these dividend-paying stocks to lose some of their appeal. Because it would be difficult to issue new shares if REITs continue to trade at discounts, some are now compelled to sell assets to raise cash to help them reposition their remaining assets or fund share buybacks. REITs could sell individual assets, sell stakes in assets to other institutional investors and enter joint ventures where they also could earn some management fees, or be acquired entirely and privatized by an investor. Industry insiders noted that while there are more for-sale signs popping up, these sales aren’t driven by the need to reduce debt because REITs have been more disciplined since the financial crisis, so property prices aren’t likely to fall drastically. Listed REITs have been net sellers of assets since 2015, according to data from Real Capital Analytics. From January to March 23 of 2018, there were $6.91 billion in disposals, compared with $5.38 billion in acquisitions. Disposals topped acquisitions in 2017 and 2016, $60.9 billion to $56.1 billion and $71.4 billion to $48.4 billion respectively, Real Capital said. Read more at The Wall Street Journal.