Blind Pool REIT IPOs: Real Estate Sector’s Response to Pandemic Challenges

In the wake of the Great Recession, real estate sponsors were zealous in their efforts to muster “blind pool” capital. The motive was to exploit the displacement and distress transpiring in the real estate market. Notably, from 2009 through 2010, an estimated 30 new public Real Estate Investment Trusts (REITs) included a blind pool component

A “blind pool” is a type of investment fund where investors pool their money together without knowing exactly how the pool managers intend to utilize these funds. This translates into a significant degree of risk for the investor, but can also provide substantial returns if the pool managers make savvy decisions.

Publicly-traded REITs have grown in popularity since the Great Recession, with many of these REITs resorting to the use of blind pool practices in order to amass funds for potential investments. Consequently, these circumstances led to an increase in the number of REIT initial public offerings (IPOs).

The peculiar economic circumstances following the Great Recession have resurfaced as a result of the COVID-19 pandemic. This has ushered in a scenario similar to the one experienced from 2009 through 2010, increasing the probability for a resurgence of blind pool REIT IPOs in the real estate sector.

The anticipated return of blind-pool REIT strategies could dramatically transform the landscape of fundraising in the real estate industry, characterizing an opportune time for committed investors to enter the real estate market. However, those entertaining such a course of action must be prepared to encounter and navigate an array of legal, financial, and regulatory intricacies.

For deeper insights on this subject matter, click here to read the full article by attorneys from Goodwin.