Nothing against rights offerings. I have been given rights before. I have exercised those rights when they were in money. I have had them expire effectively worthless because the price fell below the exercise price. It hasn't generally cost me anything to have them expire worthless, but I don't make money on them either. Right offerings to shareholders is pretty unusual. My primary experience is of employee and management rights offerings (stock options, if you will), but the opportunities and the risks are the whether the rights go to stockholders or employees. Only the frame is different. Shareholder rights offerings tend to close more quickly (two months for NYNY).
I'm sure that the NYNY rights offering was fun and profitable, especially for those who held off on selling or exercising their options until near the end of the offering. It was a nice profit for shareholders (free money, as it were). It just didn't have to work out that way (and often enough doesn't). If the share price had gone down during the offering it might not have sold at all. In this particular case, however, there was a primary buyer that wound up buying more half of the shares (and committed to doing so in advance). There was probably also some manipulation designed to ensure the price rise (don't be surprised if a fair number of New York State politicians, especially those with influence of gaming, took a profit on the offering).
The primary thing that allowed the rights offering to work was the single large buyer, who could have just as easily invested the $11.2M that NYNY wanted in exchange for common or preferred shares. That buyer was already a majority owner of NYNY (which is technically a traded subsidiary of the buyer, who owned over 50% of the company before the offering and owns over 60% of the company now. The buyer committed in advance to purchase all of its options within 10 days of the offering and to use any rights that remained unexercised at the end.
Yes, it's a backstop buyer. This is essential if the company wants to "TRY" to be fair to the existing shareholders (or at least appear to be) and must know with some certainty that they will actually raise the amount of money needed.
I'm not sure that a backstop would be needed with a REIT. Maybe they offer a unique class of security just to the common stockholders that clearly is being sold at a big discount to market value. If the common stockholder doesn't take advantage, they lose out.
The biggest reason is that they are very slow. NYNY's offering took two months to go from initial filing to completed offering. Better, if you have a new warehouse line to fund (as a for instance) to have a shelf offering ready and a brokerage ready to pay you immediately upon the commencement of the offering.
There are other prospective issues with rights offerings. There are also advantages to them, especially for shareholders who may hope to profit from the offering without actually buying the shares.
In the end, however, two months is a long time. NYNY, for instance, was fortunate that the market was rising through most of its offering period. It was also fortunate to have a large (50%+) shareholder that was, for a fee, willing to exercise all of the rights that other shareholders didn't use.