Private Equity Firms Awaiting the “Right Opportunity” with REITs

Private Equity Firms Awaiting the “Right Opportunity” with REITs
drusignola@reit.com
Mar. 29 2021

Teaser

Deloitte’s Jeff Smith says that firms have already raised funds and he expects an uptick in REIT M&A toward the end of the year.

Content

Jeff Smith, U.S. Real Estate Leader at Deloitte LLP, participated in a video interview in conjunction with REITwise 2021: Nareit’s Law, Accounting & Finance Conference.

Smith said that the landscape for REITs has shifted amid the pandemic, noting that real estate companies were in a better position heading into the current crisis than they were heading into the financial crisis in 2008.

“Debt-to-equity ratios are much more favorable, debt is laddered appropriately, and the maturities are longer,” Smith said. “[And] there really hasn’t been overbuilding going into the pandemic like there was before.”

He added that market fundamentals are strong and interest rates are at an historic low.

Smith said that private equity firms have raised funds and are ready to invest, but are waiting for the right opportunity, which could come via distressed sales, shifts to both hot and cooling markets, or real estate companies simply sticking to markets that they know.

“Toward the backend of 2021, we’ll start to see some activity [in REIT M&A],” Smith said.

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