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US REIT ATM program usage soars in Q1'19, marking new all-time quarterly high

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US REIT ATM program usage soars in Q1'19, marking new all-time quarterly high

At-the-market program usage reached new heights during the first quarter of 2019, with 37 U.S. equity real estate investment trusts using their ATM common equity sales programs during the quarter to collect $2.94 billion in aggregate — a 4% increase compared to the $2.82 billion raised during the prior quarter and nearly 8x the capital raised during the first quarter of 2018.

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Ten different healthcare REITs tapped their ATM programs during the quarter, raising $884.7 million, the most capital raised of any property sector. Medical Properties Trust Inc. sold more than 20.1 million common shares during the quarter through its ATM program, collecting $354 million in net proceeds, the most of any REIT. Welltower Inc. raised $227.2 million during the quarter through its ATM program, and Omega Healthcare Investors Inc. raised $76.5 million.

Healthcare REITs traded at a 12.7% median premium to their consensus net asset value estimates at April-end.

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Diversified net-leased REITs were also active. W. P. Carey Inc. sold more than 4 million shares during the quarter, raising $303.8 million, while STORE Capital Corp. and Global Net Lease Inc. raised $160.9 million and $152.8 million, respectively.

While forward ATM offering sales were excluded from this analysis, HCP Inc. used the forward provisions under its ATM program to allow for the sale of up to an aggregate of 3.6 million shares of its common stock at an initial weighted average price of $31.19 per share, after commissions, and Kilroy Realty Corp. executed forward equity sale agreements during the quarter to sell 875,494 shares under its ATM program at a weighted average sales price of $75.75 per share. As of their first-quarter filings, neither REIT has yet to receive any proceeds from its forward ATM sales.

Net-lease REIT Spirit Realty Capital Inc. also raised $34 million under its ATM program during the quarter through forward sales agreements, which were physically settled in shares.

Seven REITs announced new ATM programs since S&P Global Market Intelligence's last update in mid-March, bringing the total to 19 year-to-date.

Multifamily REIT AvalonBay Communities Inc.'s new $1 billion ATM program marked the largest new announcement for the period, tying with HCP and Digital Realty Trust Inc. for the largest program announcements year-to-date.

On April 15, VEREIT Inc. announced a $750 million ATM program, and Extra Space Storage Inc. announced a $500 million program May 16.

Thirty-nine unique sales agents are associated with the 19 REIT ATM programs announced year-to-date. Wells Fargo Securities LLC entered into 11 new REIT ATM sales agreements, the most of the group, while Jefferies LLC and Merrill Lynch Pierce Fenner & Smith Inc. each partnered on 10 new programs.

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