REIT: Buy-Side Strategies

Attractive Opportunities in 2018

At the sector level, there has been certain private health care players under margin pressure, which has increased the number of REITs actively acquiring assets on the private side. Medical offices should continue to be active and stay a fragmented sector, and there will be a continuation of hospital systems and private-side owners of office assets that will continue to test the waters as potential sellers of real estate.

Vertical M&A

A vertical M&A is a merger between two companies that operate at separate stages of the production process for a specific finished product. If a company wanted to offer not only income-producing properties, but also mortgages to full be able to capture the different stages of REITs it could go out and seek a mortgage REIT. This would allow it to offer the two aspects of REITs that they are involved in.

Horizontal M&A

A horizontal M&A is when business consolidation occurs between from that operate in the same space, as competition tends to be higher and the synergies and potential gains in market share are much greater for merging firm in such an industry. An example would be retail and apartments. If two firms thought they could gain market share from merging they could do a horizontal merger in which they both would gain from the expansion. The firms would combine to have more apartment buildings or retail space that could lead to more profits.

For more information on M&A refer to the Transactions section.

Key Statistics

Charlie Izaguirre contributed to this report. For a detailed list of sources, click here.