Recently more REITS have started going public in a short amount of time: Inland Western (now Retail Prop. of America), HTA and more. What do you guys think of the country's largest private REIT? Do you think they will go soon despite the SEC investigations going on or do you think they will wait it out a bit more? Or possibly just not go public at all despite what seems to be new trend
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I don't think IA in its current form would be well-received by the public markets, nor do I think there is sufficient personal upside for Inland management to seek a near-term liquidity event, so I personally doubt we will see IA go public in the near future.
First, I think IA is overly diversified for a public execution. It would be difficult to sell the market on synergies, platform value, and management focus based on their hodge-podge portfolio. Their office, industrial, and multifamily businesses are too small to standalone, so will probably need to be sold, or at least treated as non-core businesses in a future public filing (which Inland Western did with its non-shopping center portfolio). The retail and lodging businesses are IA's best bets as public entities...and I think IA is trying to build more scale in its lodging platform for that reason.
Second, the REIT will have to be internally-managed before I think any underwriters will want to touch an IPO. This could be hairy. Inland the parent will want to avoid the ugliness of Inland Western's internalization (where Inland took $375MM for selling IW its own management team, and was subsequently sued). They will also be reluctant to give up the fees.
Finally, Inland the parent is going to want to ensure the sustainability of its own private REIT business, and particularly its "golden goose" fundraising ability. I think spinning off and IPO'ing IA at what will inevitably be a loss to existing shareholders in the current market will be a fatal blow to the sponsor on the heels of Inland Western. So all told, it would surprise me to see this happen in the near future.
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