Commercial Property Executive<\/a><\/em>. \u201cGeopolitical uncertainty and the related wider repricing of risk\/spreads across capital markets has contributed to this.\u201d<\/p>\nAccording to research conducted by Fitch Ratings, numerous investors are questioning the sustainability of the historically low cap rates underpinning direct property market values, citing persistent net asset value discounts for equity REIT shares, bifurcated public unsecured bond market access and CMBS market disruption.<\/p>\n
Boyd noted that broader and more consistent public unsecured bond market access and equity valuations closer to net asset value are two key milestones REITs must pass on the path to normalized capital access.<\/p>\n
\u201cCapital access is the linchpin of REIT liquidity, given the inherent regulatory cash-flow retention constraints,\u201d he said. \u201cTherefore, it is important for investors to remain abreast of any environment changes.\u201d<\/p>\n
Both solid employment growth and disciplined bank construction lending should keep demand ahead of supply for most property types, allowing for modest one- to two-percentage-point occupancy gains and low to mid double-digit rent growth.<\/p>\n
The research shows that not every capital markets sign is discouraging. In fact, CMBS spreads have tightened during March, and REIT equity values have bounced approximately 15 percent off of their February 2016 lows. Additionally, banks continue to show strong appetites for unsecured term loans, and the private placement unsecured bond market is open at reasonably attractive rates, including for inaugural issuers.<\/p>\n
Of course, it\u2019s not the same in all parts of the country.<\/p>\n
\u201cWeaker oil prices will weigh on oil-centric markets, primarily in Texas,\u201d Boyd said. \u201cSupply-constrained urban markets are generally still performing well. However, we are also monitoring tech-tenant demand, given weaker venture capital fundraising and poor trading for some recent tech company IPOs.\u201d<\/p>\n
Looking ahead, Fitch expects CRE fundamentals to remain healthy and cap rates to increase modestly, primarily for lower physical and\/or market-quality assets, as REITs adjust their bids for a higher cost of capital and marginal buyers remain on the sidelines until the CMBS market stabilizes.<\/p>\n
\u201cReal estate is generally a lagging indicator, so to some extent there is good performance for 2016 already baked in for REITs with longer-lease-duration property portfolios (such as office and retail),\u201d Boyd said. \u201cHowever, REIT equity markets have traditionally led fundamentals, and performance has been weak for a little more than a year now, notwithstanding a recent rally.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
While REIT performance has been relatively healthy for most property types, volatility in the debt and equity markets is raising questions for investors. <\/p>\n","protected":false},"author":451,"featured_media":1004139480,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37774,37775,21783,23891,21742,37776,37777,37778],"tags":[],"class_list":["post-1004142086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-rc-dividend-yield","category-rc-forward-affo-payout-ratios","category-investment","category-national","category-latest","category-rc-premium-discount-to-nav","category-rc-price-ltm-ffo","category-rc-total-return"],"acf":[],"yoast_head":"\n
Fitch: Weaker Capital Access Impacts REIT Fundamentals - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/fitch-weaker-capital-access-impacts-reit-fundamentals\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fitch: Weaker Capital Access Impacts REIT Fundamentals\" \/>\n<meta property=\"og:description\" content=\"While REIT performance has been relatively healthy for most property types, volatility in the debt and equity markets is raising questions for investors.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/fitch-weaker-capital-access-impacts-reit-fundamentals\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2016-04-20T19:26:52+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-05-12T10:08:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2016\/03\/Stephen-Boyd-Fitch.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"600\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Keith Loria\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/\"},\"author\":{\"name\":\"Keith Loria\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/aaa29b723dad85f2444ae3cb0c4d735f\"},\"headline\":\"Fitch: Weaker Capital Access Impacts REIT Fundamentals\",\"datePublished\":\"2016-04-20T19:26:52+00:00\",\"dateModified\":\"2020-05-12T10:08:04+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/\"},\"wordCount\":464,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2016\\\/03\\\/Stephen-Boyd-Fitch.jpg\",\"articleSection\":[\"Dividend Yield\",\"Forward AFFO Payout Ratios\",\"Investment\",\"National\",\"News\",\"Premium\\\/Discount to NAV\",\"Price\\\/LTM FFO\",\"Total Return\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/fitch-weaker-capital-access-impacts-reit-fundamentals\\\/\",\"name\":\"Fitch: Weaker Capital Access Impacts REIT Fundamentals - 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