Executives of private REITs and operating companies also are looking at going public as a financing tool, a way to pay back investors and create an exit vehicle for founders looking to retire, Mr. Chadwick said.
"Existing management has been running (the REITs) now for many years," said Praedium's Mr. Appel. "They are aging and it's one way to get their money out or to work out estate issues." In the past decade, Mr. Appel said, a lot of REITs went public to pay off their debt issues.
Another increasingly popular reason for taking public companies private is that private company returns can be higher than returns on public companies, Mr. Chadwick said.
Private companies can take advantage of cheap debt more readily than the public companies, Mr. Appel said. Higher debt levels bump up returns, but public markets implicitly restrain the amount of debt public companies use, he said.
Returns are also calculated differently for the two markets: Returns on private investments are based on total return over time; public REITs trade on current cash flow.
A few REITs have flipped back and forth a few times. General Growth Properties Inc., a regional shopping center REIT based in Chicago, has made the switch twice during its 50-year history, going from private to public and back to private again. Investors and joint venture partners in General Growth include the $34.9 billion Illinois Teachers' Retirement System, Springfield, and the $131.9 billion New York State Common Retirement Fund, Albany.
"It's mostly arbitrage," Mr. Chadwick said. "There's always a spread between public and private pricing and if the spread is material, they will always do it."
Some institutions are investing in existing public and private real estate companies in addition to partnering with them to purchase large portfolios, Mr. Saylor said.
Just last week, the $51 billion defined benefit plan of the State of Michigan Retirement System Fund, Lansing, agreed to sell half of its controlling ownership interest in Simpson Housing Limited Partnership LLP, a Denver real estate investment firm, to the $31.6 billion Alaska Permanent Fund, Juneau, said Michael Burns, Alaska Permanent's executive director. The $2.1 billion deal is expected to close March 31.
The Michigan fund owned about 95% of Simpson Housing, a large private multifamily development and operating company. Alaska Permanent's purchase was a way of buying an entity with a large real estate deal flow, rather than buying one parcel of property at a time, he said.
The deal is not without precedent. Cadim, Montreal, the real estate unit of the C$122.2 billion Caisse de Depot et Placement du Quebec, is a major shareholder of The Praedium Group, which has $3 billion under management.
"Investors are starting to think a little more creatively in deploying capital," said Mr. Saylor, whose firm advised Alaska on the Simpson deal.
Praedium's Mr. Appel said all the switching could be a short-term trend. Over time, more private companies will go public to appeal to the growing number of defined contribution plans, he said. "As pension capital shifts from defined benefit to defined contribution, having a daily mark to market of a public vehicle will attract more capital over a longer period."