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Panelists ponder where money comes from: is it time for an IPO boom?

While the market seems set to continue in a pattern of slow growth, the commercial real estate industry may be due for a boom in public offerings, according to panelists at the NYU Schack Institute’s Capital Markets forum last week.

Jeffrey Horowitz, Bank of America Merrill Lynch

“I think that when we look back a year from now we will have the potential to do more on the IPO side than we have in the past couple,” said Jeffrey D. Horowitz, head of global real estate, gaming and lodging at Bank of America Merrill Lynch.

Horowitz cited a number of deals currently in the works that, if successful, could drive more companies to go public in search of funds. The past two or three years have seen four or five IPOs a year, according to Horowitz.

“I think there’s more coming up from the private equity side where the platforms need to have a change, just because there is a cycle to investing,” he said.

Forming a new REIT may be an appealing solution for building owners struggling to find financial backing from the private investment community.

From traditional investors who are “still wounded” by the market crash of 2009, to folding pension plans, investment funds are finding private capital is less available than it once was, said Richard Saltzman, president of Colony Capital LLC.

“The sources of capital within the private world are changing,” he said, noting that sovereign wealth funds often want more direct involvement with their investments than is offered in a traditional investment fund structure.

Other speakers were less sure that the pendulum is swinging towards public fundraising.

Wendy Silverstein, Vornado Realty Trust

“I actually think it’s in flux right now, that the advantage might be shifting to private versus public, but the reality is it’s about accessing different types of capital,” said Wendy Silverstein, co-head of acquisitions and capital markets at Vornado Realty Trust.

Vornado, a publicly traded REIT, established a five-investor private fund after the market crash, she said, in order to diversify the company’s sources of capital. One valuable result of that decision has been Vornado’s new relationships within the private investment community, according to Silverstein.

“I think the world is actually evolving to people wanting to do a lot of direct investing and do joint ventures, and I think that’s something that we would absolutely want to do,” she said.

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