Colony Capital and Apollo Global Management have struggled to garner the same level of support for their debt REITs that Starwood’s Barry Sternlicht did, with both firms today revealing they were halving their planned initial public offerings.
The private equity and real estate managers both launched debt REITs in July with the expectation of raising $500 million and $600 million respectively for Colony Financial and Apollo Commercial Real Estate Finance.
Investor appetite for REITs has now apparently waned though, with regulatory filings showing that Colony Financial expects to sell 12.5 million shares, rather than 25 million, for $25 each when it prices tonight; while Apollo Commercial expects to issue 10 million shares at $20 each, compared to 20 million as originally planned.
A raft of private real estate fund managers launched REITs this summer in order to tap the public equity markets and raise capital, and were bolstered by the ease with which Sternlicht raised $810 million for his vehicle, Starwood Property Trust – $300 million more than was first planned.
Two more mortgage REITs plan to come to market in the next week, including Ladder Capital’s Ladder Capital Realty Finance and AllianceBernstein’s Foursquare Capital Corp.