US REIT M&A deals value surpasses $33 billion in 2023

In 2023, the Real Estate Investment Trusts (REIT) sector found itself navigating through challenging waters as a tightening lending landscape, brought about by record-high interest rates implemented to combat inflation, has cast a shadow over its activity. 

This year, the sector witnessed a noteworthy decline in the total value of merger & acquisition (M&A) deals, a stark departure from the robust trends of the past two years.

In particular, 11 deals to buy publicly-listed REITs have been announced so far, with a combined worth of $33.6 billion, according to a report released by the National Association of Real Estate Investment Trusts (Nareit) on October 6

Notably, 93% of this total value represents acquisitions made by REITs that are already listed on major stock exchanges.

How does 2023 M&A activity compare to previous years?

The over $33 billion in M&A deals in 2023 represents a notable decline compared to previous years, particularly 2022 and 2021.

Last year, 10 acquisitions of publicly-listed REITs in the US marked a combined deal worth $83 billion, nearly thrice higher than this year. 

The gap is even more pronounced in comparison to 2021 data. In that year, there have been as many as 37 acquisitions of public REITs, representing $215.9 billion in total worth. 

US REITs raised $4.1bn in Q3 2023

When it comes to fundraising activity, US-based REITs secured $4.1 billion through secondary debt and equity offerings in Q3 2023. 

It’s worth noting that this preliminary figure is expected to increase once at-the-market (ATM) program usage data is factored in. 

Of the $4.1 billion, $2.7 billion came from secondary debt offerings, while $1.4 billion was raised through secondary common equity deals. However, this total capital raised represents a significant 81% decrease compared to the preceding quarter, which saw REITs raising a substantial $21.7 billion. 

On a year-to-date basis, REITs have amassed $43.8 billion, marking a slight increase from the $39.1 billion raised during the same period last year, excluding third-quarter 2022 ATM issuance for a fair comparison.