U.S. equity real estate investment trusts raised a record $72.28 billion through senior debt offerings in 2020 through Dec. 16, a 3.2% increase over a 2019 total that was itself an all-time high.
REIT debt offerings fell in March and April in the early weeks of the coronavirus pandemic, but spiked shortly after, reaching $15.96 billion for the month of June. Debt offerings have since simmered down in the fourth quarter.
REITs in nontraditional property sectors led the capital-raising, with communications REITs raising $15.46 billion, while data center and casino REITs raised $9.75 billion and $4.00 billion, respectively.
Expectations for new bond offerings this year had been low, with traditional property sectors possibly falling around 25%, because in 2019 many REITs had already addressed their impending 2020 and 2021 debt maturities through new issuances, said J.P. Morgan credit analyst Mark Streeter in comments at Nareit's REITWorld 2020 conference in November.
Instead, "When the pandemic first hit, we had an awful lot of REITs that just had to do that emergency liquidity," Streeter said. Others, he added, "just wanted to bolster the balance sheet, fortify the balance sheet, to show liquidity, really to put to bed any sort of solvency concerns while collection risk was going to be an unknown."
Boston Properties Inc., an office landlord, issued $1.25 billion in senior notes in May, while major June offerings included a total of $2.4 billion from information storage REIT Iron Mountain Inc. and a total of $2.6 billion from data center owner Equinix Inc.
Communications REIT American Tower Corp. raised the most capital through senior debt offerings of any REIT, at $7.96 billion, followed by industrial REIT Prologis Inc. and Equinix, at $5.32 billion and $4.45 billion, respectively. All four communications-focused REITs were among the top 15 REITs by total senior debt issuance.
The top underwriters of equity REIT debt offerings for the year through Dec. 18 were J.P. Morgan Securities LLC, with roughly $9.10 billion in deal credit, followed by Citigroup Global Markets Inc. and Morgan Stanley, with roughly $6.74 billion and $5.60 billion, respectively.
