Fortunes have taken a dramatic turn for the better in recent months for publicly traded REITs. A string of IPOs and secondary offerings have come to market for REITs planning to invest in bargain-priced commercial mortgages and CMBS issues.
The worst of the commercial real estate slump might be over in the U.K., according to analysts and property managers. Rents are falling less rapidly, meaning the sector might go positive for the first time in 25 months.
The arrival of many new mortgage REITs is a fast-developing trend in commercial real estate. There have been several successful IPOs providing a substantial amount of capital to this sector this year, and more are in the pipeline.
Currently trading on London's AIM market, U.K. property company Hansteen plans to discuss with shareholders the idea of becoming a REIT and moving from London's junior exchange to the official list of the London Stock Exchange. The company said in a statement the U.K. REIT structure would give the company "a more tax efficient and transparent structure."
Analysts at Fitch Ratings suspect the next big round of bad news for banks will come from commercial real estate loans. "Virtually all major property types [multifamily, office, retail and industrial] are suffering from rising vacancies and declining rents," a recent Fitch report warned. The ratings agency is performing its own analysis of U.S. banks' exposure to debt secured by commercial property.