In 2005, ING Clarion Partners bought Atlanta-based Gables Residential Trust for $2.8 billion in cash. That same year, Morgan Stanley Real Estate’s Prime Property Fund announced that it would buy Chicago-based AMLI Residential Properties for $2.1 billion. Then, in October 2007, the big domino fell—a fund of Tishman Speyer and Lehman Bros. bought Denver-based Archstone for $22.2 billion, just as the credit crunch was gripping the world.
Now, several years later, the buzz is increasing that some of these firms could find themselves re-entering the public markets. “The vast majority of the private deals occurred with a lot of leverage,” says Alexander Goldfarb, associate director of equity research of REITs for New York-based Sandler O’Neill + Partners.
Archstone, which declined to interview for this story, is the one name that keeps popping up. “I think it’s a very obvious candidate,” Goldfarb says. “I think it would be well-received by the market. It’s a name the analyst and investor community knows well.”
AMLI, however, due to its strong financial and ownership structure, is not a candidate for re-emerging as a public REIT, analysts say.
Gables, though, acknowledges that a return to the public is possible, but that it’s ultimately one of many strategies it will consider over the next three years.
“In that we are owned by a closed-end fund [with a finite life], we will be considering a variety of strategies to recapitalize over the next several years. One of those would be an IPO,” says David Fitch, CEO of Gables Residential.