Many large REIT’s across the nation are restructuring the process in which they manage their portfolios after successive years of acquiring distressed assets. For example, Simon Property Group and American Realty Capital Properties are splitting their portfolios into two sections – single tenant retail businesses and multitenant shopping centers. These restructurings allow for a more active management of both sectors and allow a direct play by investors into the single tenant market. In theory, the ability to directly invest in the single tenant market will attract more investors and consequentially, more money. The large REIT’s hope that the simplification of investment strategies will unlock untapped potential that has been otherwise eluded because of the broad-stroke strategies previously used.
Excerpts from article:
“After bulking up through acquisitions and new development, major REITs have been practically tripping over themselves to get small through a recent spate of spin offs.”
“According to the REITs and analysts, the spin-off strategy achieves two main goals for REITs. It offers a clean, pure-play investment story to Wall Street, which hopefully attracts more investment, and it can also reduce leverage for the parent company, the spin-off, or both.”
“The creatively restructured concept is simply based on the theory that two parts are worth more than the whole.”
Citation and link:
Drummer, R. (2014) Shopping Center Spin-offs Driven by ‘Pure Play’ REIT Craze, Costar, Costar Watchlist