What’s Driving All the REIT Mergers?
This isn't a normal investment cycle, but specific market trends are driving the flurry of activity.
When Public Storage, the nation’s largest self storage provider, announced plans this week to acquire National Storage Affiliates, one of its rivals, it became the latest example of a recent string of mergers, acquisitions and take-private deals across the multifamily and commercial real estate sectors that began last year and are expected to continue.
John Perry, senior managing director of Equity Capital Markets at CBRE Investment Banking, said the $10.5 billion all-stock transaction is “is one of the bigger public (mergers) we’ve seen in a couple of years.”
Both self storage companies are public REITs. Last year, the total value of transactions where public REITs acquired other public REITs reached only about $11.1 billion, according to S&P Global.
The merger, which will create a $77 billion storage giant, is expected to close in the third quarter. The acquisition increases Public Storage’s brand and scale in key U.S. markets, including significantly expanding its presence in the Sun Belt.
“I think scale is as important as I’ve ever seen it in nearly 30 years of tracking the public REIT space,” Perry noted. “You’ve got some growing valuation discrepancies between the scaled haves and the sub-scale have-nots in the REIT space.”
Practical considerations
Greg Willett, chief economist at LeaseLock, an insurance technology provider for rental housing, told Multi-Housing News that investment returns for individual properties are smaller than volumes in past cycles. That means that when larger portfolios are needed, scale becomes the name of the game.
“Scale also increases operational profitability when realizing the benefits of centralization, once processes like pricing, rent collections and preventative maintenance scheduling are turned over to back office specialists,” Willett said. “Adoption of operational tools powered by artificial intelligence seems likely to be led by companies with sizable portfolios, although it wouldn’t be surprising to see boutique firms prove to be innovative in using AI when making investment decisions,” Willett said.
Sergio Altomare, co-founder & CEO of Hearthfire Holdings, a real estate private equity and development company focused on self storage, agrees about the growing importance of AI in M&A transactions. His firm owns 25 self storage facilities across 10 states valued at more than $200 million, encompassing about 1 million square feet.
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“What we’re seeing now is not a normal M&A cycle. It really is a continuation of a longer-term consolidation trend that’s been accelerated by capital markets pressure and increasingly, what I believe, is a lot around data and data strategies around AI,” he said.
Private deals pick up
Veris Residential is a recent example of a publicly traded REIT that will be taken private by a group of investors led by Affinius Capital and Vista Hill Partners, following a $3.4 billion, all-cash transaction expected to close in the second quarter. Veris, previously known as Mack-Cali, had spent the last several years trying to transform itself from an office and multifamily REIT into a pure-play multifamily-focused investment trust.
It was the second such transaction announced in February impacting the multifamily industry. Earlier that month, Kennedy Wilson agreed to be taken private in a $1.65 billion deal led by CEO William McMorrow, other KW senior executives and Fairfax Financial Holdings, a Toronto-based financial services company. The company owns more than 41,000 multifamily units across the U.S, the U.K., and Ireland.
Looking at the broader REIT landscape, Perry said, “You’ve got 155 equity REITs in the U.S. and almost half of those with market caps of $2 billion or less. So, you’ve got a number of sub-scale, cost of capital disadvantaged platforms that are out there trying to compete as asset traders and it’s challenging. So that is certainly in part what’s been driving this increase in take-private activity that we’ve seen.”
S&P Global noted that deals where public REITs were taken private in 2025 totaled about $6 billion. An early January report from the agency stated that real estate M&A activity involving U.S. publicly traded REITs increased during the second half of 2025, with six announced deals totaling nearly $16.3 billion. In the first half, there were only two deals with a combined transaction value of $1.72 billion.
James Park, a senior managing director at CBRE Investment Banking said his firm started to see a boost in activity, or, as he put it, “green shoots,” in mid-summer 2025.
“People were feeling more comfortable and better about the broader landscape for investing. From a macro standpoint, people were feeling maybe a higher conviction that this is a good time or, (that) we’re starting the next up cycle,” Park told MHN. “I think a lot of it is driven by the debt markets and their recovery, which obviously is a big driver of take privates for financial buyers,” he added.
Park also pointed to “an understanding and acceptance of (interest) rates, that we are in an environment where we’re going to be in 4 to 4.5 percent for 10-year treasuries. This is the new normal.”
Both Perry and Park said that there also seems to be a greater willingness on the part of public company boards and management teams to consider bids from interested buyers, particularly if their REITs have been trading at a discount relative to perceived net asset value.
Who’s buying, and who’s a target?
Pricing dislocations are not only the main cause of privatizations, but the root of the greater uptick in M&A activity. “We’re seeing increased M&A and privatization activity in the CRE and multifamily sectors, driven by pricing dislocations and public market discounts to NAV ratios,” said Bar Mor, co-founder and CEO of Agora, a fintech/SaaS company specializing in real estate investment management software. “Well-capitalized private investors and larger platforms are stepping in to acquire assets and companies at more attractive valuations.”
“On the other hand, smaller or more leveraged players, and even some REITs trading below their underlying value are becoming natural targets,” he added.
Jahn Brodwin, senior managing director and co-leader of the Real Estate Solutions practice at FTI Consulting, Inc., in New York City, said small- to mid-sized public REITs are targets in part because of the amplified cost of being a listed company.
Brodwin notes there’s always an ebb and flow of cycles when companies are doing IPOs and the opposite – private companies going public followed by period of stability, which then precedes a time of lots of privatizations.
The buyers tend to be big private equity firms including the obvious—Blackstone and KKRwho’ve done a number of privatizations in the retail and in the multifamily spaces, Brodwin said.
“They have billions of dollars of dry power,” he noted.
Altomare also pointed out that there’s a tremendous backlog of capital that needs liquidity at both a sponsor and LP level. “We’re seeing this at the BlackRock, Blackstone level. The privatizations and what they’re solving are market dislocation. You’ve got rates trading at discounts, (but) you need to provide exits to smaller platforms or over-levered owners,” he said.
Brodwin also said foreign investors are still active in the U.S. “One, (real estate) is an inflation hedge, and it’s also a currency hedge,” Brodwin said. “Some people are buying long-term assets that have inflation protection and also have the currency stability that they’re looking for as a protection. They get two benefits versus U.S. buyers.”
Other buyers include ultra high-net-worth families and family offices that look for particular types of assets for stability and long-term holds.
“Multifamily that tends to be an asset that is viewed as a long-term hold by a lot of institutional buyers and long-term, long-horizon buyers,” Brodwin stated. In early January, TPG Real Estate acquired a majority interest in Quarterra, the multifamily development subsidiary of homebuilder Lennar Corp. for an unspecified amount. Lennar retained a minority stake in the platform and will continue to consult on management of the firm.
