In the REIT industry, the 2000s might be called the decade of privatization—at least until the credit crunch this past summer. Yet not all privatizations are of the same mold. The motives of different buyers tend to differ according to their business plans, and thus the outcomes differ as well.

Take the biggest privatization in REIT history, the early 2007 sale of Equity Office Properties Trust into the seemingly insatiable maw of private equity giant The Blackstone Group. At the time the $38.6 billion deal finally closed, most observers were fairly certain that the prime motivation was to flip many of the office assets to take advantage of the fact that selling them piecemeal would probably fetch more than if the assets were sold as part of a REIT package.

"The market did indeed expect the Equity Office portfolio to be carved up to make the numbers work," says Keven Lindemann, director of SNL Real Estate. "That's exactly what happened, perhaps faster than expected."

According to CoStar Group, Inc., Blackstone had sold nearly half of the square footage it had acquired from Equity Office by August 2007, and the sales represented roughly 70 percent of the purchase price that the investor had paid Equity stockholders. The flip seems to have been a success.

However, flipping is only one motivation to take a company private. Platform-building is another, and Blackstone is so large that it is an example of that as well.

"People focus on the quick sales of former Equity Office properties, but it's also true that Blackstone is holding onto some of those assets. It is becoming quite a large property owner in its own right," Lindemann says. "In some cases, it's becoming a market-shaping player."

Such as in the hotel sector, he says. In building a hospitality platform, one of the tactics of choice for Blackstone has been the privatization of hotel REITs. Its most notable recent privatizations in the hotel sector have been LaQuinta, a $3.8 billion deal that brought that REIT's mid-scale brands into the Blackstone fold, and Meristar, a $2.3 billion deal that brought in a number of upper-upscale properties. Both of those acquisitions were in 2006.

Now Blackstone is clearly aiming to be a force in the hotel sector, as evidenced by its move this July for the non-REIT Hilton Hotel Corporation. "This is a game-changing deal for the hotel sector and will re-ignite bid speculation for other hotel companies," Numis Securities analysts led by Richard Carter wrote immediately after that deal was announced.

Another business strategy involving the privatization of REITs might be thought of as a more "traditional" approach—take the REIT private, grow it within its sector, and then sell it in a few years, either to another private entity or possibly once more to the public.

In 2005, for instance, the California Public Employees' Retirement System (CalPERS) sold First Washington Realty Trust to a joint venture of Regency Centers and Macquarie CountryWide Trust for $2.74 billion. CalPERS had bought the REIT in 2001, growing it in the interim from 60 to more than 100 grocery store-anchored shopping centers.

Also in 2005, ING Clarion bought Gables Residential Trust for about $2.8 billion, and though it has put some of Gable's assets up for sale since then, the investor has left the REIT structure in place, including most of its management, and has allowed it to follow its previous investment strategy to grow in its core markets.

Eventually, as in the CalPERS-First Washington privatization, there may come a time when ING Clarion elects to sell Gables. At the time of the privatization, Deutsche Bank analyst Lou Taylor stated, "With far too many buyers chasing few too properties, many investors could find this syndicated private equity appealing."