The real estate investment trust (REIT) is an investment vehicle with a particular sensitivity to borrowed capital. REIT risk tied to capital source is heightened because the legal structure of a REIT is centered on distributing the vast majority of its earnings to shareholders. This means the REIT is prevented from holding back significant capital reserves, which in turn means it must borrow to finance its acquisitions and operations. That borrowing takes the form of credit from bondholders and from banks.
Beth Mattson-Tieg’s nifty deck at NREIOnline takes a useful look at the leading risk factors felt today by real estate investment trusts (REIT). The REIT marketplace is a prismatic view into commercial real estate fundamentals while they put prices on portfolios and sectors in ways that make investment easy. This means that what REITs face are good indicators of what the broader CRE market faces, and that facts on the ground often mean similar things to portfolio managers as they do to individual owners and investors.
In Miami-Dade County and Manhattan, be prepared this year for unprecedented federal oversight in the real estate deal space. Prompted by worries about money laundering, the US Treasury Department has announced it intends to require certain US title companies to identify the natural persons behind shell companies that are used to pay all cash for high-end luxury real estate.
REITs cautious because of possible interest rate hikes, offices surge in some secondary markets, good news and bad news about Atlanta’s CRE, industrial property will be hot for the rest of 2015. It’s all here at the Commercial Real Estate national news roundup for June 22, 2015.
REITs aren’t just a channel for equity-style investment in commercial real estate, they’re a kind of barometer to use to keep an eye on trends in specific sectors. When REITs go on a buying spree, it pays the trend-watcher to pick out what’s being acquired as well as the price tags. This way questions can be answered about where capital is meeting property – is it in tertiary or secondary markets? Is medical office looking better to portfolio managers than is assisted living? Presented are some of January’s biggest REIT acquisitions in the health care sector.
John Case, President and CEO of Realty Income Corp (NYSE: O) talks sustainability and durability of its acquisitions and how they drive dividends. Year to date, the REIT has sourced $20B of acquisitions and expect to close $1.4 billion more by year’s end. The clock’s ticking on that, but let’s not forget how much holiday shopping is put off until the last minute.
When H. Michael Schwartz, CEO of Strategic Storage Holdings, spoke in San Diego at the recent REISA Spring Symposium, the head of one of the top ten operators of self-storage said something interesting about the state of the marketplace in self-storage.
The role of self-storage with regard to multifamily has long been assumed – apartment dwellers on the whole occupy less space individually than homeowners yet display similar consumption patterns leading to a demand for space for their stuff.
The purpose and the process of investing in a real estate investment trust (REIT) is unclear to many, even though it’s the most cut-and-dried way to put capital into commercial real estate. Some struggle with understanding the notions of portfolio management, and questions about what properties are being invested in and why keep an investor from making the leap. Others wonder about returns: how do rents and other building cash flows become dividends or push the REIT share price in one direction or another?
The personal perspective on these aspects of REITs is not often explored by mainstream media, and when it happens, it’s worth checking out. National Public Radio’s Uri Berliner recently produced an excellent program on the REIT scene by letting us follow along with his journey as an investor.
Many speakers try and give you tips and know-how of negotiations but few have the first-hand, global experiences, that Signature Series speaker Barry Elms can provide. From the Middle East to Midwest from the federal government to General Motors, Barry Elms discusses what his real life negotiations have taught him and will share some of those lessons learned to our Commercial Intelligence Briefing (CIB) listeners.