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The REIT Weekly – Manhattan Rents Rise

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This week in the world of REITs; Investor activism comes to the fore, Manhattan rents rise, and SNL lists the top 25 institutional owners of U.S. equity REITs.

According to a list of the top 25 institutional owners of U.S. equity REITs compiled by SNL, Vanguard is number one, seeing 13.45% growth in the first quarter. The information is based on form 13-F filings and shows that the average increase in market value for the REIT portfolios held by the 25 investors was 11%. RREEF America LLC had the greatest quarter-over-quarter market value increase in U.S. equity REIT positions among the top 25 institutional investors.

During the month of May, Manhattan apartment rents rose to a five year high. The median monthly rent rose 3.1 percent to $3,300 in May from a year earlier, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The increase bodes well for many REITs invested in Manhattan properties as it is “shifting the advantage back to landlords after a brief respite for tenants.”

Marcato Capital Management LP, an activist investor that owns 21.8 million shares of American Realty Capital Properties (ARCP), has sent a letter to ARCP urging them to curb their activities. In the letter, Mick McGuire, Managing Director at Marcato, writes, “The company is engaging in too many transformative transactions too quickly.” ARCP responded to the letter and stated, “We are committed to driving value for all ARCP stockholders and will continue to take actions to achieve this important objective.”

In this video interview, Peter Baccile discusses the demand for REIT IPOs and his thoughts on investor activism. “Activism hasn’t really been a prevalent theme in REITland for the past couple of decades,” commented Baccile. “But of late, it’s becoming more and more present. I think activism is going to be something that we continue to spend time looking at,” he added. Mr. Bacille conjectures that shareholder activism could influence the structure of existing REITs.