Barclays

Barclays' Brendan Lynch on Data Center REITs’ Extended Growth Opportunity Amid AI Demand

sborchersen-keto@reit.com — Thu, 02 Jul 2026 14:46:24 +0000

Lynch says the best data centers have an ecosystem of clients which attracts additional clients.

REITweek 2026 Recap

pconnors@reit.com — Mon, 08 Jun 2026 14:09:21 +0000

Nareit’s REITweek: 2026 Investor Conference brought more than 2,300 members of the REIT community to New York City on June 1-4, including representatives from more than 1,600 companies and organizations across the listed real estate and investment industries.

REIT Fundamentals Supported by Favorable Macro Conditions

drusignola@reit.com — Fri, 26 Dec 2025 14:32:17 +0000

Barclays’ Ragavan Bala discussed sector-level tailwinds, evolving M&A structures, and disciplined capital strategies.

REITworld 2025 Recap

pconnors@reit.com — Fri, 12 Dec 2025 14:49:59 +0000

Nareit’s REITworld: 2025 Annual Conference convened 1,000 REIT leaders and industry professionals Dec. 8–11 in Dallas.

REITweek 2025 Recap

drusignola@reit.com — Sat, 07 Jun 2025 02:41:14 +0000

Nearly 2,500 people came together over the course of REITweek 2025 to discuss REITs and REIT-based real estate investments.

Investment Bankers See Potential for REIT Rebound in 2023

Kyle Gustafson — Tue, 28 Feb 2023 12:54:55 +0000

REITs are expected to be effective in deploying capital, especially in second half.

Thank You REITweek: 2021 Investor Conference Sponsors

drusignola@reit.com — Fri, 11 Jun 2021 20:22:45 +0000

Sponsor support enabled the event to gather more than 3,000 REIT industry professionals.

REITwise 2021 Recap

drusignola@reit.com — Mon, 29 Mar 2021 13:52:37 +0000

The three-day virtual conference focused on legal, financial, tax, and accounting issues for REITs.

How E-Commerce is Changing the Global Industrial Real Estate Market

os@interactivestrategies.com — Thu, 06 Oct 2016 12:30:00 +0000

How E-Commerce is Changing the Global Industrial Real Estate Market os@interactive… Oct. 6 2016

Michele Lerner

publications@nareit.com

Michele Lerner is a freelance writer and regular contributor to REIT magazine.

Consumer-driven e-commerce is pushing demand for modern logistics facilities in new locations around the world.

Industrial Strength

Consumer-driven e-commerce is pushing demand for modern logistics facilities in new locations around the world.

Amazon.com isn’t the only company in the world changing expectations about how and when consumers get the things they want delivered. The impact of e-commerce and other trends in the retail business have transformed the industrial real estate market and strengthened fundamentals for industrial REITs in both domestic and global markets.

“Rents rose 6 percent globally and 9 percent in the U.S. in 2015. This year, we continue to see growth of about 5 percent in the U.S., for example,” says Chris Caton, senior vice president and head of global research for Prologis (NYSE: PLD). “It’s still a strong story: We’re getting decent demand growth in spite of slowing economies around the world.”

Britton Winterer, senior vice president for investments at Gramercy Property Trust (NYSE: GPT), says that institutional capital in industrial real estate has driven pricing higher.

“Industrial real estate isn’t very sexy, but it’s certainly more attractive now than in the past,” Winterer says.

Reaching the Last Mile

Caton says that while there are several factors on both the demand and supply side that are boosting industrial fundamentals right now, the rise of e-commerce is anticipated to further strengthen the sector in future years.

“We’re in the early innings of e-commerce right now, so there’s still a lot of opportunity there for growth,” says Caton. “But e-commerce is only part of the story, and there’s a lot of diversity within our industry.”

Chuck Sullivan, head of the U.S. platform for Global Logistics Properties (SGX: MCO.SI), says that GLP has experienced double-digit growth in e-commerce in every market where they invest, including the U.S., China, Japan and Brazil.

“While e-commerce is directly tied to only about 10 to 15 percent of GPT’s portfolio now, e-commerce is projected to grow to 30 percent or more of the global economy and will have a real impact on industrial space,” says Winterer. “Every time we look at a building now we consider whether it could work as an e-commerce space.”

Caton says that a decade ago, e-commerce meant retailers wanted specialized buildings, but now the emphasis is on logistics and proximity to consumers to solve the “last mile” challenge of the final leg of delivery.

“Prologis was ahead of the curve among REITs in rebranding itself as a logistics and solutions company, rather than one that owns warehouses,” says David Toti, managing director of BB&T Capital Markets.

e-Commerce and other demand drivers

Consumer consumption is among the three top demand drivers in the global industrial sector, according to Caton.

“Consumer consumption is growing in developed markets, and there’s an emerging consumer class in China, Mexico and Brazil,” says Caton. “The other two demand drivers are the modernization of the supply chain and trade, particularly in gateway markets.”

Caton says e-commerce is growing globally by 20 percent per year, particularly in the U.S., Europe, Japan and China.

Sixteen percent of GLP’s portfolio is invested in e-commerce sites, but in China e-commerce represents 26 percent of the company’s portfolio, Sullivan notess.

“The interesting thing about e-commerce is that most customers are looking for both a large facility in a major population area and a series of smaller places for fast fulfillment,” he says.

Prologis has a large footprint of e-commerce sites, with some as small as 10,000 square feet and some as large as 1 million square feet. There’s also diversity in age, with some modern sites and others more than a decade old, according to Caton.

“Shorter and shorter delivery times in the U.S. and continental Europe mean locations need to be within and adjacent to major population areas to reach consumers quickly and reduce transit costs,” he says. “This is a shift away from more centralized but distanced areas. The trend is also visible in emerging markets, such as in China, Brazil and Mexico, where this type of expansion is a relatively recent phenomenon. In the U.K. and Japan, it has been a trend for a while because the populations are relatively more concentrated.”

Toti says that the need for efficiency and faster delivery means there’s significant room for growth in the industrial sector, even in a recessionary environment. Caton also points out that restructuring of the supply chain happens in both good and bad economic cycles, which is good news for the industrial sector.

“Earlier distribution channels were always essentially a hub-and-spoke model, but now that businesses are focused on shortened delivery times, a spider web pattern of industrial sites is needed,” says Evan Smith, vice president for REIT equity research with BB&T Capital Markets.

Vacancies are down in most global markets and rents are up, yet development has recovered gradually with a notable component remaining as build-to-suit, rather than speculative, says Caton.

Even though GLP is cautiously evaluating the economic slowdown, Sullivan says the company is starting $2.1 billion in global development in fiscal year 2017, $1.2 billion of which is in China.

“A big part of the industrial story is the lack of development of industrial real estate during and after the economic downturn, even as rents have risen,” Caton says. “Part of this is just because both land and labor costs are rising, but it’s also because of the institutionalization of our business which means that investment committees are involved with decision making, and they have less of an appetite for risk since the global financial crisis.”

Asia

Not surprisingly, China is the story in Asia’s industrial real estate market.

“The Chinese government’s efforts to reorient the economy to a consumer-driven economy have paid off, with 60 percent of Chinese GDP now consumer-driven,” Sullivan says.

Even though China’s growth has slowed, the expansion of the consumption economy and the rise of organized retail chain stores, pharmaceuticals and auto parts businesses are driving strong fundamentals in that market.

“China is dramatically undersupplied and has less than one foot of industrial space per capita compared to 70 feet per capita in the U.S.,” Caton says. “Development is active, and vacancy rates in the top 15 markets are stable in spite of the slower economic growth.”

In Japan, vacancies are extremely low and demand is strong for “best-in-class” modern logistics facilities, which are typically multi-story buildings, says Sullivan.

Europe

The fundamentals in Europe are not quite as good as in the U.S., but rents are rising and vacancy rates are declining there because of supply constraints, according to Winterer.

“The restructuring of supply chains across Europe has driven growth there for the past five years,” says Ross Smotrich, managing director and senior research analyst for Barclay’s Capital. “For awhile there was a dearth of modern facilities. Now e-commerce is driving demand in Europe, but on a different timeline than in the U.S. It could become more like the U.S. eventually, but most Europeans are still tied to grocery shopping daily and often live in smaller places without a lot of space for consumer goods.”

Smotrich says “last mile” development is needed in Europe. Although it’s tougher to build in there because of the lack of land, he says some REITs are finding locations for build-to-suit facilities.

Mexico and Brazil

Two of the larger economies in the Americas are seeing demand for industrial space grow.

“Mexico’s economy is uneven, but vacancy rates are down and development is improving there,” says Caton. “In spite of the fact that Brazil is in a deep recession, demand for industrial space is outperforming the economy. Vacancy rates are less than 5 percent there because of the need for modern buildings, but rents are down and values are flat to down. We still have confidence that Brazil will improve in 2017.”

While Sullivan agrees that the macroeconomic environment in Brazil is challenging, he says only 20 percent of logistics space in the country is modern. Therefore, demand remains strong. However, GLP is currently focused on customer retention there, rather than development.

Evaluating the Future of REIT IPOs

os@interactivestrategies.com — Wed, 18 Mar 2015 17:45:00 +0000

Evaluating the Future of REIT IPOs os@interactive… Mar. 18 2015

Charles Keenan

publications@nareit.com

Charles Keenan is a freelance writer and regular contributor to REIT magazine.

A promising landscape could fuel more REIT IPOs.

Offerings & Opportunities

REIT initial public offerings (IPOs) tend to ebb and flow with market conditions, and they’re now showing promise of continuing their respectable run.

Low long-term interest rates, constrained supply in many property sectors, decent valuations and low vacancy rates have all contributed to favorable conditions for well-managed companies to go public. After a great run for REIT stocks in 2014, with the FTSE NAREIT All REITs Index up 27 percent, the higher valuations could lure new entrants to the IPO market.

“We have a Goldilocks situation of low long-term interest rates, a good growth profile, and competition for limited homes for capital,” says Vivek Seth, managing director and head of real estate investment banking at Raymond James Financial. “We’re at the point in the cycle where we should see a fair bit of activity this year.”

“Strong fundamentals, reasonable prices and really no competitive threat from new supply—that’s a great backdrop for IPO activity,” adds Jim Sullivan, a managing director at Green Street Advisors.

Markets Receptive

At first glance, 2014 looked like a lackluster year. Only five U.S.-based IPOs were completed that involved stock exchange-listed equity and mortgage REITs going public. That compares with 19 deals in 2013.

But with volume of $4 billion, according to NAREIT data, it was a healthy year. While that number trailed deal volume in 2013 of $5.7 billion, going back to the early 1990s, it only trailed the volume of years 1993, 1997, 2004, and 2013.

After a six-month lull last year, the prospects for IPOs in 2015 received some tailwinds near the end of 2014. In November, Paramount Group Inc. (NYSE: PGRE) became the largest REIT IPO ever at $2.6 billion, and Store Capital Corp. (NYSE: STOR) came to market with a $585 million offering. Both deals were oversubscribed, and the stock prices of the companies have risen since the offerings.

The first REIT IPO of 2015 came to fruition on Jan. 30 when Dallas-based InfraREIT, Inc. (NYSE: HIFR) went public. The InfraREIT IPO raised $460 million.

If management has a good story to tell, the markets are willing to listen, says Jackson Hsieh, vice chairman and a managing director in the investment banking department at Morgan Stanley.

“The market for traditional IPOs is open, willing and able,” Hsieh notes. “But it’s a very high bar. The company has got to be in the right subsector, have the right management team and have the right growth prospects. If it has those elements, the deal will get done.”

Timing is also critical. Paramount and Store were in the queue for IPOs earlier in 2014, but waited for better conditions, Hsieh notes: “The rally in the market in November gave us and the company confidence that we could execute.”

Paramount, led by Albert Behler, owns class-A office properties in New York, San Francisco and Washington. Behler and his management team have proven themselves to investors over the years.

“There is a lot of interest for the types of buildings Paramount manages,” Hsieh says. “Asset sales in the major gateway markets for class-A buildings today are very robust.”

The transaction also helped Paramount improve its balance sheet, while giving an exit to some shareholders.

“The deal provides permanent capital for the portfolio buildings,” Hsieh says. “It also had a great balance of being able to create value for people who wanted to get out and provide an entry point for institutions to come in.”

For Store Capital, it was the third company taken public since 1994 by CEO officer Chris Volk. The Store deal came with significant overhang. Oaktree Capital owns 70 percent of the shares, which it is likely to divest in the next five years, according to a Green Street report.

Filings Hint More IPOs on the Way

A number of smaller deals are in the works, with several companies having filed registration statements with the Securities and Exchange Commission in recent months. While the deals can get pulled, the filings give a window into intent. For example, Easterly Government Properties Inc., which focuses on acquisition, development and management of class-A properties leased to U.S. government agencies, filed in December for a maximum offering of $100 million.

Mortgage REITs have also returned to the game. Reverse Mortgage Investment Trust Inc. filed in December and Great Ajax Corp. filed in January for maximum offerings of $100 million. Sutherland Asset Management Corp. commenced an IPO in January.

Competition for Capital Could Hamper Volume

For these and other IPO prospects, they must compete against existing REITs, which raised $28.7 billion of common and preferred stock in 2014, according NAREIT data. That demand makes it harder for IPO aspirants to make their case.

“There are already REITs out there in most property types, so you already have choices,” says Scott Schaevitz, chairman of Americas real estate investment banking at Barclays. “People get excited about IPOs when they think the management team has an approach to the market that is differentiated and could provide superior returns.”

Sellers of equity might also shun IPOs for better deals elsewhere. Institutions, corporations and funds of various kinds are competing against public markets for assets coming up for sale.

“There is quite a bit of capital out there trying to buy all forms of real estate,” says Steve Buller, portfolio manager of Fidelity’s Real Estate Investment Portfolio fund. “They can at times offer a better alternative than selling it or listing it on the New York Stock Exchange.”

Multifamily is one area where private bidders are winning out. They’re pushing down capitalization rates and making a direct sale to institutions an easy choice, according to Seth. “Cap rates are lower for those assets in the private markets than they are in the public markets, so there is no reason to go public when you get better valuations as a private company,” he says.

It’s the path Blackstone took when it sold IndCor Properties, a portfolio of industrial properties, for $8.1 billion in December to affiliates of GIC, Singapore’s sovereign wealth fund. While Blackstone had taken Brixmor Property Group Inc. (NYSE: BRX) and Hilton Worldwide Holdings (NYSE: HLT) public in 2013, the firm likely got more money from an institutional fund than it could have on the public market. It had made necessary filings for a possible IPO while shopping the assets to investors. By closing a deal with an institutional investor, Blackstone went for a sure thing rather than waiting to see what an IPO would yield. “There is a lot of risk associated with going public versus an outright sale,” Buller notes.

Despite the large private deals, in most sectors the supply remains tight, representing another favorable condition for more IPOs. “The expectations are an OK economy—combined with little new development in most property types—is going to continue to support strong operating fundamentals,” Sullivan says.

Key Elements of a Successful REIT IPO

"Critical mass of a portfolio. Strong management team and track record. A good growth story with a reasonably leveraged balance sheet." —Vivek Seth, Raymond James Financial

"Strong management teams. Proven business plans, identifiable growth, and solid fundamentals." —Scott Schaevitz, Barclays

"The right subsector, the right management team, the right growth prospects." —Jackson Hsieh, Morgan Stanley

"Strong fundamentals, good valuations, no competitive threat from new supply." —Jim Sullivan, Green Street Advisors

"Management, investment strategy, financing strategy." —Alexander Goldfarb, Sandler O’Neill + Partners

New IPOs, Newcomer REITs

IPO spinoffs could also become a major factor in the years to come, as diversified REITs look to maximize the value of internal assets. Vornado Realty Trust (NYSE: VNO) spun off 79 shopping centers, three malls and a warehouse park in January under the name Urban Edge Properties (NYSE: UE). In February, Inland American Real Estate Trust spun off its lodging assets into Xenia Hotels and Resorts (NYSE: XHR).

“We will see more specialization and creation of expert verticals,” Seth says. “You are going to see the whole smorgasbord of activity.”

So full steam ahead.

“If the REIT market holds and the rate environment remains benign, the attractiveness for more REITs to go public is going to grow,” Sandler O’Neill + Partners Managing Director Alexander Goldfarb says.

Private Possibilities

As some companies look to go public, private equity has its eyes on existing stock exchange-listed REITs. Blackstone has said as much. Jonathan Gray, head of Blackstone’s real estate arm, noted at a conference in New York in November that REITs are still below their 2007 highs.

In one potential step toward that end, Blackstone announced a deal in December to sell 26 assets in Northern California to Hudson Pacific Properties Inc. (NYSE:HPP) in a $3.5 billion deal in cash and stock. The transaction, expected to close in the first half of this year, would give Blackstone a 48 percent stake in Hudson. In February, Blackstone also agreed to buy a roughly 50 percent interest in a New York office portfolio from RXR Realty in a deal that values the assets at $4 billion.

Aside from REIT stocks staying below their peak, they also haven’t kept pace with property valuations, suggests Barclay’s Schaevitz. “While REIT share prices have performed well, they may not be keeping up with the Main Street real estate prices in some property types,” Schaevitz says.

That has made REIT portfolios potential targets for deals, according to Schaevitz.The last wave of privatizations was in 2005 to 2007, he notes. Stocks traded at a discount to real estate valuations, and inexpensive debt was aplenty. Those factors have lined up once again.

“It’s an opportunity to get a large portfolio of assets with or without the management team that is currently in place,” Schaevitz says. “Private equity shops can get scale in a certain property type.”

That said, these deals can be costly, according to Morgan Stanley’s Hsieh. Buyers of public companies must pay a control premium to acquire a controlling stake. The board needs to be willing to entertain the idea versus sticking with the status quo. There are defeasance costs and friction costs as they relate to taking out different kinds of securities. “You have to have a lot of conviction of what you are willing to pay for something to makes sense,” Hsieh says.

So while some private funds have an eye on REITs, snapping them up won't be easy.

Charles Keenan is a regular contributor to REIT magazine.