ATM Programs: The Continuous Equity Raising Tool

Introduction

No equity tool fits the REIT funding profile as neatly as the at-the-market program. Instead of raising a slug of capital in one underwritten block, a REIT with an ATM sells small amounts of newly issued stock into the open market day after day, at whatever price the shares happen to be trading, through a broker acting as its sales agent. What began as a niche mechanism has become the dominant way listed REITs raise equity: by early 2025 more than 100 public REITs maintained active ATM programs covering over $75 billion of capacity, and in a single quarter REITs raised a record $8.4 billion through them. Understanding why the format suits REITs so well, and how the forward-sale feature solves a timing problem that would otherwise make it clumsy, is essential REIT capital-markets knowledge.

An ATM program is a standing facility, set up once and then drawn on opportunistically. The REIT files a prospectus supplement registering a dollar amount of stock and signs an equity distribution agreement with one or more banks, who act as sales agents rather than underwriters. From then on, when management wants capital, it instructs the agent to sell up to a specified amount, and the agent feeds those shares into the normal trading flow at prevailing prices, blending them into ordinary daily volume.

At-the-market (ATM) program

An ATM program is a standing equity-distribution facility under which a listed company sells newly issued shares incrementally into the open market at prevailing prices through a designated sales agent, rather than in a single underwritten offering at a fixed price. The issuer controls how much, when, and at what minimum price it sells.

The issuer keeps tight control over the process: it sets the volume, the timing, and any price floor below which the agent must stop selling, and it can pause entirely. Crucially, the cost is far lower than a traditional deal. The sales agent typically takes a commission of roughly 1% to 2%, against the gross spread a full underwritten offering commands, because the bank is not committing capital or taking placement risk. The detailed plumbing of how the shares are dribbled out is covered in the equity capital markets guide's piece on ATM dribble-out mechanics.

The ATM fits REITs because of how REITs are built. The 90% distribution requirement means a REIT retains little cash and must fund growth externally, and its capital needs are not a single event but a steady stream: a development pipeline to fund, debt maturities to refinance, and acquisitions to close. A tool that lets the company raise small amounts continuously, matched to those needs, is a far better fit than a sequence of disruptive block deals.

No overhang, full control

Two further advantages reinforce the fit. First, there is almost no announcement effect: because the shares trickle out rather than landing as a discrete supply shock, the ATM avoids the share-price pressure that accompanies a marketed or overnight follow-on. Second, the ATM is inherently opportunistic. Management can lean in and sell more when the stock is strong and trading above NAV, where issuance is accretive, and pull back when it is weak, exactly the discipline that separates good REIT capital allocation from bad. Over the past five years, ATM volume across REITs has surpassed traditional underwritten offerings precisely because of this combination of low cost, control, and minimal disruption.

The one awkwardness of a plain ATM is timing. If a REIT sells stock today to fund an acquisition that closes in six months, it sits on idle cash in the meantime, diluting earnings and dragging returns while it waits to deploy the proceeds. The forward-sale feature solves this elegantly, which is why nearly every modern REIT ATM includes one.

Forward sale agreement

In an ATM forward sale, the sales agent borrows shares and sells them into the market now at today's prices, while the REIT enters a forward contract to issue its own shares to the bank at a locked-in price on a future settlement date, typically anywhere from three months to two years out. The REIT fixes the price today but receives the cash only when it settles.

Mechanically, the bank borrows and sells stock during a hedge-execution window, and the initial forward price is based on the volume-weighted average price achieved over that window, then adjusted over time. The REIT does not receive proceeds until it settles, and it has a choice of how to do so when the settlement date arrives.

The effect is powerful: the REIT locks in equity pricing while the stock is strong but takes the capital only when the acquisition or development actually needs funding, eliminating the cash drag entirely.

The ATM is not a universal solution. Its great strength, blending into daily volume, is also its constraint: a REIT cannot raise a very large sum quickly through an ATM without either overwhelming its own trading volume or stretching the program over many weeks. For a transformational acquisition that needs billions in equity at once, the overnight or marketed follow-on covered in the follow-on offerings article remains the right tool, because only a committed deal can place that much stock in a single stroke.

The discipline therefore still rests on price relative to NAV, not on the convenience of the tool. An ATM makes accretive issuance easy to execute, but it equally makes dilutive issuance easy to overlook, and a disciplined treasurer's whole job is to lean on the first while refusing the second.

What the ATM ultimately reflects is how mature REIT capital markets have become. A sector that issues equity continuously has built an instrument that lets it do so cheaply, quietly, and on its own timetable, with the forward feature aligning the moment of pricing to the moment of need. For a treasurer running a perpetual external-funding machine, that alignment is worth far more than the headline simplicity of a single big deal.