Join our community of smart investors

Private equity on the prowl for Reit bargains

Cheaper debt and big discounts have combined to make Reits more attractive
Private equity on the prowl for Reit bargainsPublished on September 13, 2024

Private equity (PE) is back on the prowl in the listed property space. After Brookfield’s expression of interest in Tritax EuroBox (EBOX) earlier this summer came Starwood Capital’s bid for Balanced Commercial Property Trust (BCPT) last week.

The listed sector has been trading at a discount to net asset value (NAV) since interest rates went up. Until this summer, Blackstone’s spring 2023 take-private of Industrials Reit, which was at a premium to net tangible assets, has been the only private equity bid in the space. The deals in the space have been between listed players using cash and shares, such as LXi and Londonmetric (LMP)

Interest rates are a significant factor in the re-emergence of private equity buyers, said Peel Hunt analyst James Carswell. “Yields have moved out quite significantly, [so] the spread between risk-free rates and property yields I think looks attractive again whereas 18 months ago it probably didn’t.” The BCPT offer is still at a 9 per cent discount to NAV, so there is plenty of value out there for those with bullish outlooks. 

To continue reading...
  • Read 3 articles for free each month
  • Educational articles and topical investment guides
  • In-depth podcast episodes by our writers and industry professionals
  • Interactive live webinars on investment themes that matter
Already a subscriber? Sign in