{"id":1004512450,"date":"2021-02-03T07:19:54","date_gmt":"2021-02-03T15:19:54","guid":{"rendered":"http:\/\/internal.cpexecutive.com\/?p=1004508031"},"modified":"2021-09-29T07:19:12","modified_gmt":"2021-09-29T15:19:12","slug":"u-s-reits-long-road-to-full-economic-recovery","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/u-s-reits-long-road-to-full-economic-recovery\/","title":{"rendered":"U.S. REITs’ Long Road to Full Economic Recovery"},"content":{"rendered":"
\"Stephen<\/a>

Stephen Boyd<\/p><\/div>\n

As the vaccine is rolled out throughout the country, many business and property owners are hopeful that the end of the pandemic\u2014and its many economic hardships\u2014may finally be in sight. With more and more Americans vaccinated each day, herd immunity no longer feels like a far-off notion.<\/p>\n

The severe economic damage left in the wake of the virus, however, won\u2019t be repaired overnight. In the immediate future, the U.S. still faces a surge of virus cases and corresponding stay-at-home orders nationwide. Paired with measured federal stimulus packages, the ongoing pandemic could still weigh heavily on REITS over the course of the coming year.<\/p>\n

The pandemic drove a number of rating downgrades and negative outlooks for REITs based on cash flow volatility, tenant and geographic exposure and the amount and duration that issuers were likely to exceed previously established negative rating sensitivities. Social distancing restrictions and related store and office closures will continue to pressure tenant cash flows\u2014particularly for regional and local in-line retail tenants with less flexibility than national chains.<\/p>\n

Negative outlook<\/h2>\n

Currently, roughly one-third of U.S. REITs have a negative outlook, while just 3 percent are rated as positive\u2014a margin of more than 20 percent.\u00a0Therefore, the 2021 sector outlook for REITs is negative.<\/p>\n

Hard-hit REIT sectors\u2014such as hotels and gaming and leisure properties\u2014relying on tourism will continue to experience much of the same decline in their businesses due to a lack of domestic and international travel. Additionally, with many companies choosing to maintain a work-from-home model for the foreseeable future, office REITs won\u2019t be back to pre-pandemic levels anytime soon. Other property types like retail and multifamily assets are also likely to experience setbacks, particularly during the first half of the year.<\/p>\n

But it\u2019s not all grim news\u2014the overall REIT sector is still improving. In general, REIT operating performance has been in line with the original expectations set early in the pandemic. When combined with better-than-expected liquidity, REITs\u2019 performance could support stabilizing outlooks of current negative ratings in many cases.<\/p>\n

When it comes down to it, property sectors are looking at 2023 before they can return to the peak cash flows they experienced in 2019. Given the direct economic hit brought upon REITs over the past year, it\u2019s no surprise that it will take some significant time for the sector to once again reach pre-pandemic prosperity.<\/p>\n

Stephen Boyd, CFA, is a senior director in\u00a0Fitch Ratings<\/a>\u2019 Corporates group.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

It will be some time before property sectors return to the peak cash flows they enjoyed in 2019, according to Stephen Boyd of Fitch Ratings.<\/p>\n","protected":false},"author":1255,"featured_media":1004518006,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21684],"tags":[],"class_list":["post-1004512450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-viewpoint"],"acf":[],"yoast_head":"\nU.S. REITs' Long Road to Full Economic Recovery - 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\/u-s-reits-long-road-to-full-economic-recovery\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"U.S. REITs' Long Road to Full Economic Recovery\" \/>\n<meta property=\"og:description\" content=\"It will be some time before property sectors return to the peak cash flows they enjoyed in 2019, according to Stephen Boyd of Fitch Ratings.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/u-s-reits-long-road-to-full-economic-recovery\/\" \/>\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=\"2021-02-03T15:19:54+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-09-29T15:19:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/04\/Stephen-Boyd-Fitch-300x225-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"300\" \/>\n\t<meta property=\"og:image:height\" content=\"225\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Stephen Boyd\" \/>\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\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/u-s-reits-long-road-to-full-economic-recovery\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/u-s-reits-long-road-to-full-economic-recovery\/\",\"name\":\"U.S. REITs' Long Road to Full Economic Recovery - 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