Office REIT Sector Could See Significant Change, Transwestern Research Finds

By Patricia Kirk

A shakeup may be in store for the office REIT sector with firms likely to change hands as interest rates rise and investors—private equity funds, other REITs and foreign investors—seek opportunities for placing large amounts of available capital.

Steve Pumper, executive managing partner at Transwestern, has predicted that private equity funds would begin taking over REITs for some time.

“This started to happen last fall, because REITs are trading at discounts, and private equity funds need to put large amounts of capital work,” he says, noting that this is hard to do in meaning way with one-off transactions. REITs are willing to sell whole portfolios rather than sell off assets one-by-one, Pumper says, because it costs less in transaction fees and involves a shorter timeframe to sell.

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