In the 3Q 2011, non-listed REITs raised over $2.1 billion in equity capital. The capital raise was dominated by the top ten non-listed REITs, which raised over 80% of the total non-listed REIT equity.
Year-to-date, non-listed REITs have raised over $6.6 billion compared to $33.7 billion raised by listed equity REITs through initial public offerings and secondary offerings (according to NAREIT). Collectively, non-listed REITs have now raised over $60 billion in cumulative equity capital compared to the $353 billion market capitalization of listed equity REITs as of 9/30/11 (according to NAREIT). The top ten fundraising non-listed REITs are highlighted in the table below.
Top Ten Equity Raises (in $millions) | 3Q 2011 | 2011 YTD |
American Realty Capital Trust | $ 268 | $ 1,138 |
Cole Credit Property Trust III | $ 339 | $ 936 |
Behringer Harvard Multifamily REIT I | $ 260 | $ 557 |
CB Richard Ellis Realty Trust | $ 194 | $ 466 |
Corporate Property Associates 17 – Global | $ 129 | $ 435 |
Apple REIT Ten | $ 43 | $ 428 |
Hines Global REIT | $ 116 | $ 393 |
Industrial Income Trust | $ 105 | $ 319 |
Healthcare Trust of America | $ 19 | $ 268 |
CNL Lifestyle Properties | $ 21 | $ 250 |
With the strong equity raise and healthy credit markets, non-listed REITs were very active in the transaction markets, acquiring $3.8 billion in commercial real estate properties in the 3Q 2011 and $8.8 billion in transactions year-to-date 2011. Non-listed REITs represented 6% of all commercial real estate transactions in 2011, and several non-listed REITs, led by Cole Credit Property Trust III and American Realty Capital Trust, are among the largest acquirers of commercial real estate in the United States.
Top Ten Acquisitions (in $millions) | 3Q 2011 | 2011 YTD |
Cole Credit Property Trust III | $ 969 | $ 1,800 |
American Realty Capital Trust | $ 214 | $ 961 |
Wells REIT II | $ 0 | $ 610 |
Corporate Property Associates 17 - Global | $ 231 | $ 549 |
KBS REIT II | $ 136 | $ 534 |
Industrial Income Trust | $ 94 | $ 523 |
Inland Diversified Real Estate Trust | $ 38 | $ 449 |
CB Richard Ellis Realty Trust | $ 54 | $ 404 |
Hines Global REIT | $ 153 | $ 370 |
Inland American Real Estate Trust | $ 276 | $ 340 |
Dividend yields among effective non-listed REITs, which are open to new investors, rose slightly from 6.41% in the 2Q 2011 to 6.43% in the 3Q 2011. The dividend yields of closed non-listed REITs declined slightly from 5.21% in the 2Q 2011 to 5.17% in the 3Q 2011. Closed non-listed REITs experienced many dividend reductions over the past few years due to declining operations. These dividend reductions are the reason for the lower dividend yields of closed non-listed REITs. The dividend yields of non-listed REITs compare favorably to the 4.1% dividend of equity listed REITs as of 9/30/11 (according to NAREIT).
The leverage of non-listed REITs has remained relatively steady with the leverage of effective non-listed REITs at 35% in the 3Q 2011 and closed non-listed REITs at 40% in the 3Q 2011. The leverage ratios reflect the total debt against the total cost of real estate assets. Non-listed REIT leverage ratios are similar to the 38% leverage ratio of listed REITs as of 9/30/11 (according to NAREIT). NAREIT calculates the leverage ratio for listed REITs as total debt against market capitalization which differs from the total cost of real estate assets.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
