REIT capital raising in 2024 has surpassed 2023 and 2022 levels after having undergone a substantial decline after the COVID pandemic. According to the National Real Estate Investment Trust Association (Nareit), US REITs raised $23.3 billion from secondary debt and equity offerings in the third quarter of 2024 and approximately $65 billion in debt and equity in 2024 through the third quarter, surpassing 2023’s total $61.7 billion and 2022’s $51.8 billion raised by REITs. REITs are increasingly attracting significant capital from institutional investors, including pension funds, insurance companies, and sovereign wealth funds. These investors seek stable income and long-term growth, making REITs an appealing option. Global capital flows are increasingly finding their way into the U.S. real estate market, with foreign investors seeking opportunities in REITs. This trend is influenced by favorable currency exchange rates and the perceived stability of US assets.
Recently many REITs have explored non-traditional financing methods, such as preferred equity or mezzanine debt issuances, in order to supplement their funding. These instruments can offer flexibility and potentially lower costs compared to conventional debt. Many REITs are also partnering with private equity firms and debt funds to secure capital for acquisitions and developments. This collaboration allows REITs to leverage additional expertise and financial resources while sharing risks. REITs have raised $9.9 billion in follow-on common stock offerings, $931 million in preferred share offerings, and $7.4 billion in at-the-market (ATM) offerings in 2024 to date. In 2023, REITs raised $11.6 billion in common stock offerings, $1.1 billion in preferred stock offerings, and $19.6 billion in ATM offerings.
M&A activity has been notably calm in 2024, with one deal completed for $9.2 billion, and no M&A transactions in the third quarter of 2024. Over the past three years, deals for 37 REITs were either announced or completed. REITs are instead more frequently forming joint ventures with other real estate firms or institutional investors to pursue larger projects or enter new markets. These partnerships can provide necessary capital and shared expertise, reducing risk.
Read Nareit’s market commentary and access Nareit’s market data for additional information.