Real estate companies were once again active in the capital markets during the first quarter, taking full advantage of wide-open markets by raising billions of dollars.

Partially driving the capital raises has been robust acquisition activity, with some of the largest equity offerings coming from the health care REIT space, which has seen several major deals in recent months.

Common stock

The effect of the health care REIT consolidation is quite noticeable in the common stock arena.

HCP Inc., which on April 8 acquired hundreds of assets from HCR ManorCare Inc. in a $6.1 billion deal, completed one of real estate's largest first-quarter common stock offerings March 22 with a $1.27 billion offering, including overallotments.

Not to be outdone, Ventas Inc., which made waves when it said Feb. 28 that it would pursue a $7.4 billion merger with Nationwide Health Properties Inc., also completed a common stock offering during the quarter, though not quite as large. Ventas on Jan. 31 closed a common stock offering that raised gross proceeds of roughly $300.8 million.

In all, the real estate sector completed 39 common stock offerings worth a total $8.68 billion during the first quarter. The number of deals was actually down from the 48 transactions a year ago, but aggregate proceeds were far larger in 2011. Average deal size in the 2011 first quarter totaled $222.7 million, compared to $89.8 million in the prior-year period, when real estate companies raised $4.31 billion from common offerings.

Among financial firms, Bank of America Merrill Lynch mopped up in the first quarter among real estate common stock offerings with 10 deals representing a deal credit of $2.15 billion. The next firm on the list, Wells Fargo Securities LLC, posted a deal credit that was less than half that at $787.2 million, but it had nearly as many offerings at eight. UBS Investment Bank closed out the top three with four offerings for an aggregate deal credit of $675.0 million.

IPO

There were three IPO deals during the first quarter, worth $946.8 million, up in aggregate volume from $526.8 million spread across three deals in the 2010 first quarter.

American Assets Trust Inc. and Summit Hotel Properties Inc. completed two of the IPOs during the first quarter, with offerings totaling $648.3 million and $253.5 million, respectively.

Closing out the quarter was Preferred Apartment Communities Inc. pricing its $45 million IPO in line with expectations. Wunderlich Securities Inc. acted as the company's underwriter. In one of the company's early registration statements, the company said it expects to use the funds to invest in properties.

No single underwriter boasted more than one offering. As a result, there was a three-way logjam at the top of the League Table rankings between Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo Securities; all worked on American Assets Trust's IPO and received deal credit of $216.1 million.

Despite robust capital markets activity, the IPO pipeline has clogged of late. During New York University's REIT symposium, several panelists noted that they expected IPO activity to remain weak moving forward. Specifically, one panelist noted that there were few remaining ideal candidates to go public.

Preferred stock

Preferred stock offerings exploded in the first quarter with eight deals valued at $1.46 billion, outstripping the five deals totaling $346.5 million during the prior-year period. The first quarter was so busy that the total value of the offerings nearly matched the 2010 full-year total of $1.92 billion.

The average size of a preferred stock offering during the first quarter was $182.1 million, much larger than the average size of $69.3 million during the 2010 first quarter.

Health Care REIT Inc. boasted the largest preferred equity offering of the quarter with a $718.8 million deal completed March 1, contributing to the trend of large capital offerings and robust acquisition activity among health care REITs.

Sneaking in right at the end of the quarter, Ramco-Gershenson Properties Trust on March 31 completed an $80.0 million offering of 1.6 million newly issued 7.25% cumulative convertible perpetual preferred shares of beneficial interest. Underwriters were Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, which tied for third place in the League Table with two offerings for a deal credit of $159.8 million each.

Wells Fargo Securities led all comers in the preferred stock arena with five offerings for a total deal credit of $359.6 million, followed by Bank of America Merrill Lynch with four deals totaling $244.6 million.

Debt

The only type of capital offering not to increase year over year was debt offerings. Real estate companies closed 17 deals worth $6.73 billion during the first quarter, down from 24 deals for $7.88 billion during the year-ago period. The average deal size during the first quarter was $395.6 million, up from $328.5 million in the prior-year period.

The top three financial firms were separated by a razor-thin margin. Inching out the win for the first quarter was Bank of America Merrill Lynch with 12 deals totaling $1.28 billion. Rounding out the top three were J.P. Morgan Securities LLC with 11 deals at $1.13 billion and Wells Fargo Securities with 10 deals at $1.02 billion.

HCP was a significant contributor to the aggregate total for not only common stock offerings, but also for senior debt offerings. In January, the company priced a series of senior note offerings totaling $2.4 billion aggregate principal amount of senior unsecured notes.