Total investment volume in US real estate was estimated to be $542.4 billion last year, a  1.8 percent drop compared with 2018, according to findings published in real estate services firm CBRE’s fourth-quarter capital markets report.

But dissecting the total into different types of transactions reveals a precipitous drop in entity-level deals.

On a year-on-year basis, there was an 86 percent decline in entity deals, including both minority and majority stake acquisitions. CBRE uses Real Capital Analytics’ definition of entity deals, encompassing the privatization of a public company, publicization of a private company, and more common, a merger and acquisition transaction.

CBRE’s global chief economist Richard Barkham told PERE the drop in momentum in entity-level deals in 2019 followed a strong 2018. “REITs respond quite sensitively to interest rates. 2018 saw rising short rates and bond rates,” he explained. “And the REIT sector showed quite big discounts to net asset value. One or two big purchases happened and that underpinned a pick-up in entity-level transactions.”

He added that the surge in entity-level transactions, at least in part, represented foreign investors buying into US REITs.

However, Barkham also pointed to the traditionally erratic nature of entity-level deals. “They come and go, depending to a certain extent on REITs pricing and people wanting to take private some major companies, as was the case in 2018.”

Indeed, the other types of transactions – portfolios and single assets – recorded a healthier 2019.