Bloomberg: Discounts in U.S. Property Stocks Set Stage for Buyout Spree
According to Bloomberg: Get ready for a wave of takeovers of U.S. publicly traded landlords.
Real estate investment trusts-- companies that own properties such as luxury hotels, office towers and shopping malls -- are trading at an almost 15 percent discount to what investors would pay for buildings individually, according to Green Street Advisors LLC. The gap, the biggest in five years, has been growing since May, pushing the odds of REIT buyouts to the highest since 2006, the property-research firm’s data show.
“If I’m a fund and still have money to put to work, it’s better to go buy at a discount and have a platform in place,” said Lukas Hartwich, an analyst at Newport Beach, California-based Green Street.
REITs that own hotels look especially cheap relative to the value of the properties they own, making them an attractive target, according to Hartwich of Green Street. Sunstone Hotel Investors Inc. and DiamondRock Hospitality Co., both trading with a 25 percent discount to their asset values, have takeout odds of 30 percent, Green Street data show.
“Hotels are just more economically sensitive,” Hartwich said. “When you have some jitters in the market, that tends to hit the hotel sector harder.”
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