Some REITs Flee IPO Altar; Market Volatility Gives Some Cold Feet as Others Cut Price
Author: A.D. Pruitt</br></br>When Weyerhaeuser Co. first disclosed it would become a real-estate investment trust last year, it looked like the forest-products provider would have lots of company.</br></br>Lured by strong gains in REIT stocks last year--the Dow Jones Equity All REIT index rose 31%, compared with a 24% rise in the S&P 500-stock index--a number of companies assembled plans to become a REIT. On Monday, Weyerhaeuser said it will distribute $5.6 billion in retained earnings and profits to its shareholders in the form of a special dividend, a required step to becoming a REIT.</br></br>But with the stock market experiencing bouts of volatility, some companies that had planned to become REITs are getting cold feet, especially private companies that were planning to become REITs via initial public offerings of stock.</br></br>"It's unlikely all of them will go public unless we see a more stable market," said Ron Sturzenegger, managing director and global head of real estate, gaming and lodging investment banking for Bank of America Merrill Lynch.