There seems no end to the number of Real Estate Investment Trusts (REITS) making secondary stock offerings these days. Why? Because apparently investors can’t get enough of a good thing.
Total Returns from REIT stocks have been on the up and up in 2010. While the FTSE NAREIT U.S. real Estate Reyrn Index fell 4.68% in January, it rose 5.06% in February, 9.42% in March and 6.58% in April before falling again by 5.32% in May.
Those performance metrics were enough to spur a series of secondary offerings as REIT’s tap investors for more capital.
Recently, HCP Inc (NYSE HCP) priced a public offering of 13.5 million shares at $33 per share, which the REIT expects will raise more than $445 million. The Company increased the offering from 12 million shares due to investor demand.
Long Beach, California based HCP specializes in senior housing, medical office buildings, hospitals, and other health care facilities. It owns or has interests in 677 properties, and said proceeds would repay borrowings under its revolving credit facility, part of which had been used to acquire four senior hosuing facilities.
The Underwriters-Bof A Merril Lynch, UBS Investment Bank and Wells fargo Securities-also have an option to purchase up to 2.025 million shares of cfommon stock exercisable within 30 days.
HCP’S shares closed down $1.63 , or 4.75% , to $32.72 on Friday June 18.
Also last week, Indianapolis based Duke Realty Corp, ( NYSE: DRE) priced a public offering of 23 million shares of its common stock at $ 11.75 per share. Duke also granted the underwriters a 30 day option to purchase up to 3.45 million additional shares to cover over allotments, if any.
The REIT owns about 135 million sq. ft. of industrial, office, and medical office properties nationwide. It intends to use the net proceeds from the offering to fund the recently announced acquisition by Duke Realty Limited Partnership of its joint venture partner’s 50% interest in the Dugan Realty, L.L.C. joint venture, to repay debt and for general company purposes.
The Offering is being made pursuant to an effective shelf registration statement and prospectus filed by Duke with the SEC on July 31, 2009.
Earlier last week, Dallas based Felcor Lodging Trust Inc, (NYSE: FCH) announced plans for its own public offering of 25 million shares of common stock.
Capital raising isn’t limited just to Public REIT’s traded on exchanges either. A nerw report from Atlanta -based researcher Blue Vault Partners finds that non traded public REITS whose shares are sold through financial advisors at a fixed price, are on track to raise $7 billion in 2010, a 19% increase over 2009.
Is There an OAKSTONE REIT….specializing in Airport Industrial ? Stay tuned…. ( credit okcreview)