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Like with all things it depends. If the plan is to go on a buying spree then most likely you would raise cash through an equity offering. For smaller transactions most REITs have revolving lines of a credit to fund equity portions of acquisitions.
Also keep in mind that REITs are required to distribute 90% of their taxable income which may be a lot less than their FFO. So there's a good chance there is cash around from FFO for acquisitions.
They tend to 'acquire first' via the use of credit lines, this allows them to better time the issuance of stocks and bonds as they also like to 'play the market'. When they go through all the expense and time to go public, report public, etc. the cost of SEOs is considerably less than an IPO, in fact they just 'shelf register' most of the shares they create.
They can also use program like 'at the market' or ATMs to sell shares through a process that's like daily trading (a bit more like a open-end mutual fund or ETF process).
Remember, public financing is often (at least historically) way cheaper than raising private funds. It really isn't always a given that 'simply raising fund after fund' is easy, many investors want to trade their shares daily for liquidity purposes and don't want the lock up of years.
Finally, remember than REIT prices are often at a premium to NAV (private value in theory), thus they get a value lift in selling share publicly (when this is true). When REIT prices are at a discount the REPE shops try to take public REITs private, then they list with a new IPO when it reverses itself. Look at how PE exits their funds, its often via an IPO or sale to a public entity.
PE firms have always had leveraged buy outs (LBOs) as a strategy. The idea is to take advantage of mispricing in the public markets. When NAV > REIT price, they can make the difference in theory by buying at the public price. Recently, this has been fueled by PE having access to cheap capital, back in the 80s, it was more due to corporate inefficiency (this is before the rise of REITs or PE getting really interested in RE).
When the public markets 'improve', they can harvest the profits by selling back to the public markets via an IPO. Or they can divest the assets piece by piece or as whole/partial portfolio (like BX did with Equity Office, probably the most famous PE buyout of a REIT). Since there is a wide market for RE assets, this strategy can be especially good at times. As you can 'breakup' the REIT without damaging the value, for a operating firm, this may not be so easy.
Go watch the movie Barbarians at the Gate, it is an HBO docudrama about the KKR buyout of RJR Nabisco in the late 80s. It's awesomely good and really explains the process well. The book is even better!