“The significant amount of activity in the public net lease market is a good barometer for the broader market.” – Shelby Pruett, Chairman and CEO of Equity Global Management (EGM).
In the last ten months the public net lease REIT sector has grown significantly. Growth has come primarily from several notable acquisitions and initial public offerings. These include: Realty Income Corp. (O) which signed a definitive agreement in September to acquire American Realty Capital Trust, Inc. (ARCT) which had gone public in March; Spirit Realty Capital (SRC) which opened on the New York Stock Exchange in September; and W.P Carey (WPC) which elected REIT status in October and acquired its non-traded REIT. In addition, in September Cole Property Trust stated that it was exploring a potential sale of assets or initial public offering. Just prior to the preceding activity, ECM Realty Trust went through the IPO process ultimately selling its assets to Realty Income Corp.
If all of the outstanding transactions referenced above occur, the total enterprise value of the public net lease REIT sector will increase by approximately $12.9 billion, or more than 60%. This growth is exclusive of growth due to share price appreciation in the underlying public companies which has also been significant. Pruett believes this growth will benefit the public net lease sector as well as the private equity firms operating within this sector. While this growth is significant, it represents only a fraction of the investable corporate net lease real estate market. To capitalize on this asset class over the next decade Pruett believes it is important to understand the differences in net lease strategies and what constitutes a truly high quality strategy or asset.
(Article originally published in GlobeSt.com)