Publicly traded real estate investment trusts are seeing a shift this year in the capital that serves as their lifeblood, reshaping how some of the nation’s largest owners of commercial property finance growth.
Traditional capital‑markets fundraising, in which REITs raise money mainly through public equity offerings and debt sold to institutional investors, fell 18% in the first quarter from the same time last year. REITs raised about $10 billion through capital offerings, a decline from the $12.2 billion a year earlier, according to Nareit, the industry’s main trade group.
That pullback, however, reflects how some REITs are turning to alternative sources of capital — such as private joint ventures or bespoke financings — while others are being acquired outright, eliminating the need for public fundraising altogether. The changes come at a time of lingering economic uncertainty, higher borrowing costs and geopolitical tensions that is weighing on investors' appetite for risk.
Mergers‑and‑acquisition activity climbed to multiyear highs, signaling accelerating consolidation across property types. M&A surged to $26.1 billion in the first quarter, Nareit said, eclipsing all of 2025 in just three months.
Capital‑raising activity slowed in tandem with debt issuance during the quarter, according to Nareit, even as REITs secured financing at lower interest rates than a year earlier.
Debt offerings accounted for almost all of the decline with $6.3 billion raised, or 63%, of total capital during the quarter. That's down 29% from $8.9 billion a year earlier. Even so, REITs locked in cheaper borrowing costs, with the average coupon on unsecured debt offerings falling to 4.7% from 5.4% for full‑year 2025.
“The broader macro economy has impacted REIT capital raising but I would note that the lending window is wide open, and we saw multiple REITs doing debt deals,” David Auerbach, chief investment officer at Hoya Capital, said in an email to CoStar News. “As interest rates remain elevated and the 10-year hovers above 4.25-4.35%, companies are waiting for conditions to get a little more friendly to really turn on the fountain.”
Financial flexibility
Common stock offerings in the quarter fared better by totaling $2.4 billion, roughly in line with the $2.6 billion raised a year earlier. Preferred equity issuance fell more than 50%, dropping to $340 million from $700 million.
“While capital issuance is modestly lower year-over-year, it reflects flexibility and discipline," Edward Pierzak, senior vice president of research at Nareit, told CoStar News in an email. "We know the capital markets are open for REITs, particularly on the debt side. REITs continue to maintain strong balance sheets, so they can be selective and issue debt or equity when it’s most advantageous.”
Realty Income Corp., one of the nation’s largest publicly traded REITs, turned to private capital markets during the quarter. The company raised $687 million through a municipal energy financing in California and another $1 billion from Apollo Global Management via a new joint venture, in which Apollo acquired a 49% stake in a portfolio of 500 retail properties.
Similar moves toward alternative capital sources are emerging in the data center sector, where owners face mounting funding needs tied to large‑scale infrastructure requirements.
The return of REIT initial public offerings after a prolonged lull added another wrinkle to first‑quarter activity, as new issuers entered the market while established players became acquisition targets.
The quarter’s most notable capital markets event was the first REIT IPO of 2026, which was priced in March. Denver‑based Janus Living raised $878 million, and its senior housing REIT began trading on the New York Stock Exchange last month. The company’s initial portfolio includes 34 senior housing communities.
Two additional IPOs have been announced in the healthcare and data center sectors, signaling renewed investor interest in public listings. National Healthcare Properties filed for an offering that could raise up to $100 million, while Blackstone Digital Infrastructure Trust submitted a preliminary registration statement for a potential $2 billion IPO.
Standout quarter for M&A
M&A activity was another defining feature of the quarter.
Five acquisitions of listed REITs were announced, carrying a combined transaction value of $26.1 billion, including assumed debt — surpassing all of 2025, when five deals totaling $14.4 billion were completed, according to Nareit.
One public‑to‑public transaction alone reached $10.6 billion, with Public Storage agreeing to acquire National Storage Affiliates in an all‑stock deal.
Smaller privatization transactions averaged $2.2 billion, including Blue Owl Capital’s $2.4 billion deal to scoop up healthcare landlord Sila Realty Trust. No REIT merger deals were announced in the first quarter of last year.
REITs also have remained active acquirers of individual assets. In 2025, gross property acquisitions reached $67.3 billion, up from $47.6 billion in 2024, while dispositions totaled $47.3 billion, according to Nareit.
Healthcare, retail and residential properties led acquisition activity last year.