4 REITs That Could See M&A Activity Soon

D.A. Davidson analysts Barry Oxford and Steve Shaw just issued a new research note on the real estate sector that asked a simple question: "Will this be the summer of mergers & acquisitions?"

While the two aren't aware of any current M&A chatter, they name three office REITs -- Brandywine Realty Trust BDN, First Potomac Realty Trust FPO and Corporate Office Properties Trust OFC -- along with one industrial REIT -- Rexford Industrial Realty Inc REXR -- to keep an eye on. This subset of names "present an opportunity for investors," the analysts wrote, because they trade at "persistent discounts" to NAV.

More broadly, Oxford and Shaw explained that the real estate industry is "favorable" for consolidation.

"The REIT market has been trading-off nearly 10% year-to-date while cap rates have remained relatively unchanged," they wrote. The REIT marketplace trades at a near 10 percent discount to NAV, with some trading at more than a 15 percent discount.

"If this spread persists, the environment could become ripe for M&A activity as institutions buy the cheaper REITs portfolio over like kind assets in the private real estate market."