REITs have recapitalized their balance sheets through public equity and debt offerings during the past 18 months, and the industry has reduced its average leverage by one-third. Now, recapitalized REITs are seeking acquisitions from distressed sellers on the private side of the commercial real estate market, but few transactions have taken place because banks are extending and reworking private owners' loans. When they are forced to take properties into foreclosures, REITs will begin acquiring properties in larger numbers, NAREIT's Brad Case predicts. But bargains might not be easy to find, Federal Realty Investment Trust CEO Don Wood warns, "because there is a lot of money on the sidelines that is pushing values up."
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