(Corrects time period for money raised in third paragraph.)

June 3 (Bloomberg) -- Real estate investment trusts in the U.S. may raise about $582 billion by 2013 for acquisitions as competitors sell properties and values fall, the National Association of Real Estate Investment Trusts said.

Publicly traded REITs will probably accumulate about $728 billion, including debt, for purchases, said Brad Case, vice president for research at NAREIT. The group expects the surplus capital to spark property buying by the middle of next year.

U.S. commercial real estate values fell almost 23 percent through March 31 from the peak in October 2007 as credit dried up, Moody’s Investors Service said May 18. REITs including Vornado Realty Trust and Simon Property Group Inc. raised $11.5 billion in offerings in April and May and that’s “just the front edge of the iceberg,” Case said yesterday in an interview.

“The process that’s taking place starting right now looks very much like the process that we saw starting in early 1991,” he said.

That year marked the bottom of the last industry decline. In the three years that followed, the combined market capitalization of REITs increased at an annual rate of 48 percent, according to NAREIT.

Simon Property, the Indianapolis-based mall owner that’s now the biggest REIT by market value, and Vornado, the third- largest, both sold shares to the public for the first time during the early 1990s.

Possible IPOs

Today’s closely held real-estate companies may do the same during the next three years because it’s the easiest way to raise money, Case said.

The cash may enable them to reduce debt as a proportion of market value to as little as 25 percent by 2013 from 53 percent at the end of the second quarter, Case said.

The trade group also expects REITs to buy a “massive” amount of commercial property from private owners by the end of 2012, increasing their market share to 31 percent from the current 5 percent, Case said.

Michael Kirby, a REIT analyst with Newport Beach, California-based Green Street Advisors, concurred with NAREIT’s conclusion.

Public Markets

“The public market is going to drive everything,” he said today during a panel in New York at the association’s annual conference. “It will be the solution just as it was in the early 90s.”

Case and Michael Grupe, NAREIT’s executive vice president for research and investor outreach, plan to post a presentation about REIT recapitalization on the trade group’s Web site this week.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net.

Last Updated: June 3, 2009 13:46 EDT