By announcing that it had closed a tender offer on nearly $300 million in notes, Chicago-based Equity Residential became the third public company in just over a month to buy its notes and push back possibly troublesome balance sheet maturities.

Equity purchased $105.3 million of the principal on its 4.75 percent note due June 15, 2009, and $185.2 million of the principal on its 6.95 percent note due March 2, 2011. With these purchases, the REIT was able to secure roughly 46 percent and 62 percent of the principal amount of the notes, respectively.

While Equity received no discount on the purchase, it still makes sense for them to buy as many near-term maturities as possible, says Taylor Schimkat, senior associate for Green Street Advisors, a Newport Beach, Calif.-based REIT consulting and research firm. "If the REITs have the capacity, it makes sense for them to retire their near-term, unsecured bonds early [and where possible at a discount to par] and push out their maturities," Schimkat says.

Others have received discounts, though. In late December, Camden Property Trust made a tender offer of $108 million for notes with a face value of $470 million. By buying the notes, Camden received, on average, a 7 percent discount. Earlier in January, Alexandria, Va.-based AvalonBay Communities closed a 7.5 percent discount on its medium-term notes due August 1, 2009, and December 15, 2010. The average discount to par on the bonds that were tendered was 1 percent.

The availability of Fannie Mae and Freddie Mac credit facilities are also driving this trend. "As a result of Fannie and Freddie debt being readily available and relatively cheaper than unsecured bonds by a wide margin, the REITs are smart to pre-fund their capital needs over the near term with secured debt as long as their balance sheets can support that debt," Schimkat says.

That's why other public companies may soon be making tender offers on their own notes. "We would be interested in taking a look at things like making tender offers for our bonds," says David P. Stockert, president and CEO of Post Properties, an Atlanta-based apartment REIT.