Seniors Housing Weekly Update -- Investing In Non-Traded REITs

February 19, 2013


February 19, 2013. 60 Seconds with Steve Monroe. KKR sees an opportunity in the small REIT market, but it may not be the only one.

Investing In Non-Traded REITs

As we all know, there has been much focus on the large health care REITs and their billion-dollar acquisitions. And there should be, since these can be sector-changing events. But a lot of the action these days is with the smaller REITs as well as what are known as the non-traded REITs. And today, they are in a great position to grow and provide shareholders with above-average returns.  Obviously, KKR agrees, as it just committed $150 million to Sentio Healthcare Properties in the form of convertible preferred equity that it expects to be invested, and leveraged, over the next two years. If Sentio is successful in deploying the capital, more will surely follow. And what better way for a large private equity firm to invest in this space than through a small REIT, which is set up to do the small deals? And then, they can capitalize on the growth of that REIT with either an IPO, if its value gets up over a billion dollars, or a sale to one of the larger REITs, which are always on the lookout for large portfolio deals. Either way, we think others may follow KKR’s lead.



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