Nareit has identified a growing trend among REITs — the use of joint ventures in “deals that are growing in frequency and size.” The drivers of what was long an alternative but relatively minor strategy in the space are tighter capital markets, market volatility, and REITs that want to buttress balance sheets and expand their geographic reach.
The trend started a few years ago. “We’ve seen JV formations across a variety of property types ranging from multifamily and self-storage on one end of the spectrum to office to data centers and large industrial properties on the other end, particularly when an asset is being developed or re-developed,” Daniel LeBey, partner at law firm Vinson & Elkins, told Nareit.
An example was the $83 million acquisition of Proscenium, a 526,000 square foot Class A office building in Atlanta by a joint venture between Cousins Properties and Town Lane. The latter owned 80% of the JV, with Cousins taking the remaining 20%. Cousins was to provide property management and leasing services.
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