This article is republished with permission from REITCafe.

MedEquities Realty Trust announced terms this week for its initial public offering (IPO), currently scheduled for September 29. The Nashville-based company, which invests in a range of health care facilities and health care–related debt, will raise up to $259 million by offering 19.9 million shares in the $12 to $14 range. The IPO is only the third for a real estate investment trust (REIT) so far this year. Is this a sign that the doors are opening for further IPO activity?

Ongoing uncertainty about the timing of a Federal Reserve interest rate hike and its impact on REITs has kept potential IPOs on the sidelines. Investors are also concerned that market fundamentals have peaked and that future industry growth will be slower at best or that market conditions will deteriorate as supply increases and demand softens.

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In addition, the Internal Revenue Service issued regulations in June that clamped down on tax-free REIT spin-offs that were a significant source of growth for specialty REITs. Among the traditional real estate sectors, it is difficult to make a case for a new REIT, when existing REITs offer a track record of solid performance.

Only two new REITs have debuted during 2016. MGM Growth Properties, a spin-off from MGM Resorts, went public with a $1.05 billion IPO in April, and Global Medical REIT followed in June with a much smaller $150 million IPO.

Equity REITs were recently moved from the financial sector to the new 11th global industry classification standard sector. The new stand-alone sector has made REITs more visible, which could boost the IPO market.

Currently in the wings is an IPO for Hilton, which is spinning off its lodging and resort properties. The new REIT, to be called Park Hotels and Resorts, is expected to go public before year’s end.

Despite recent activity, it seems premature to predict a recovery in the REIT IPO market. REITs’ high dividend yields are attractive, but the real estate cycle is maturing, and investors do not know when the Fed will raise interest rates. Adding to market uncertainty, Federal Reserve Chair Janet Yellen singled out commercial real estate as potentially in a bubble during a press conference this week. Many of the conditions that have been holding back the IPO market have not changed, which does not inspire confidence in the success of future REIT IPOs.

* TREPP-i Survey Loan Spreads levels are based on a survey of balance sheet lenders. For more information, visit Trepp.com. 

** – 10 yr. Treasury Yield as of 9/23/2016.