Corporate Financing Analysis - REIT Time, REIT Place: Still In Vogue In US - 16 FEB 2015
Thanks to US investors' continued demand for yield and strong real estate fundamentals, Real Estate Investment Trusts (REITs) remain in vogue at present. BMI cautions that as soon as interest rates begin to rise, interest in the sector will begin to wane, however.
According to data provider Dealogic, January 2015 was a solid month for REIT activity. Three REITs priced offerings during the final week of the month raising USD814mn between them. This trio of deals brought January activity to thirteen deals (worth a combined USD3.4bn) - the joint highest start to a year on record for deal volume, and on par with January 2014 and January 2014. The USD3.4bn raised represents the second highest tally for the value of deals behind USD3.8bn (via 11 deals) at the start of 2011.
BMI notes that one REIT deal in particular caught the eye last month. To be sure, popular New York restaurant chain Shake Shack's IPO, which after exercising the full overallotment option raised USD121mn, hit the ground running and enjoyed a strong bounce in the one-day aftermarket. After selling stock to investors at USD21 per share on January 29 - up 40% from the initial mid-point of USD15 - its share price opened up 124% at USD47 upon trading, and closed its debut day on the New York Stock Exchange (NYSE) at USD45.90. This all means that
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