{"id":1004760451,"date":"2025-06-04T03:43:29","date_gmt":"2025-06-04T11:43:29","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004760451"},"modified":"2025-06-09T04:13:12","modified_gmt":"2025-06-09T12:13:12","slug":"reitweek-special-report-the-resilience-of-reits","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/","title":{"rendered":"REITWeek Special Report: The Resilience of REITs"},"content":{"rendered":"
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BXP President & Director Doug Linde and CEO Owen Thomas discussed how they will grow FFO per share at Nareit’s REITWeek conference. Photo by CPE<\/figcaption><\/figure><\/div>\n\n\n

When the going gets tough, it\u2019s good to be a REIT. With macroeconomic uncertainties hanging over the CRE industry, it helps to own the best assets in your property class and to have the financial flexibility that comes with high creditworthiness.<\/p>\n\n\n\n

That was one of the key takeaways from yesterday\u2019s Nareit REITWeek investor conference. Despite tariffs, higher-for-longer interest rates and the threat of stagflation if not recession, REITs maintain their access to cost-effective capital and that\u2019s helping them seize growth opportunities.<\/p>\n\n\n\n

\u201cREITs are really well-positioned,\u201d Ed Pierzak, senior vice president of research for Nareit, told CPE<\/em> yesterday<\/a>. \u201cTheir operational performance has really been quite solid, and they\u2019ve maintained really strong balance sheets.\u201d<\/p>\n\n\n\n

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READ ALSO:<\/strong> Why Tariff Turmoil Doesn\u2019t Shake Up Fitch\u2019s View on REITs<\/a><\/p>\n\n\n\n

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The average cost of debt for REITs is 4.2 percent, Pierzak noted, while 90 percent of REIT debt is fixed-rate and 80 percent is unsecured.<\/p>\n\n\n\n

Gavin Duckworth, managing director of hedging and capital markets for Chatham Financial, told CPE<\/em> he sees more REITs taking the advantage of rate volatility\u2014and their financial stability\u2014to lock in lower rates in advance of their debt transactions when there is a dip in rates. (The 10-year Treasury slipped below 4 percent on April 4, for example.) Smaller private real estate companies with less credit strength than REITs may not have the flexibility to do such hedging.<\/p>\n\n\n\n

\u201c(REITs) want to control what they can control,\u201d Duckworth said.<\/p>\n\n\n\n

But REITs are seeking rate locks of shorter duration today. \u201cWith such high volatility, we see REITs highly attentive to the forward curve and where rates are going,\u201d Duckworth noted.<\/p>\n\n\n\n

During REITWeek, executives from roughly 90 REITs get 30 minutes to tell investors and analysts how they’re reaching operational goals and growing their companies despite higher rates, suppressed share prices and an uncertain economy. Here are some highlights from yesterday’s presentations.<\/p>\n\n\n\n

Retail acquisitions are up<\/h2>\n\n\n\n

Phillips Edison & Co. CEO Jeff Edison was upbeat about opportunities to grow PECO\u2019s portfolio of necessity retail properties. PECO is planning to acquire between $350 million and $400 million in new assets, and with \u201cmotivated sellers\u201d having presented $7 billion to $10 billion of properties for sale at ICSC this year, Edison is confident the company will hit its target.<\/p>\n\n\n\n

\u201cWe believe we\u2019ll be at the high end of it,\u201d Edison said. \u201cIf it opens up, we have a balance sheet that goes beyond our guidance.\u201d<\/p>\n\n\n\n

DOGE offers opportunities<\/h2>\n\n\n\n

While some find the cost-cutting work of DOGE haphazard, Easterly Government Properties finds it an \u201cenormous tailwind,\u201d according to President & CEO Darrell Crate.<\/p>\n\n\n

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Easterly Government Properties President & CEO Darrell Crate and CFO Allison Marino told investors that DOGE will be a “tailwind” for their company. Photo by CPE<\/figcaption><\/figure><\/div>\n\n\n

That\u2019s because, as the Federal government shrinks its footprint, it is also transitioning from owned space to leased space. Easterly Government Properties, which currently owns 92 buildings leased to the Federal government, is planning to be part of that transition. <\/p>\n\n\n\n

\u201cI challenge anyone to say they are better at this than we are,\u201d Crate said.<\/p>\n\n\n\n

The government is also thinking more \u201cpragmatically\u201d about who they choose for partners, Crate noted. Meanwhile, staff cuts and agency reorganizations will shorten the chain of command for real estate decisions.<\/p>\n\n\n\n

\u201cThe government is now getting things done and done quickly, which is now important to them, and we are a partner of choice,\u201d he said.<\/p>\n\n\n\n

Office leasing holds up<\/h2>\n\n\n\n

BXP executives expect to grow FFO per share and increase their share price over the next couple of years through its strong leasing activity, which has actually “accelerated” post-tariffs. <\/p>\n\n\n\n

\u201cThere is a lot of dislocation going on, but our leasing continues to move forward,” said Doug Linde, president & director.<\/p>\n\n\n\n

BXP also has an active development pipeline\u2014for example, its 290 Binney St. lab building project in Cambridge, Mass., is 100 percent leased to Astra Zeneca, and it is “pretty aggressively” selling non-producing assets.<\/p>\n\n\n\n

In addition, the company is flexing its residential muscles. In a “unique one-off” situation, BXP made a preferred capital investment at 13 percent in a two-tower development at 290 Coles St. in Jersey City, N.J. That was “a good use of corporate capital,” according to CEO Owen Thomas. Meanwhile, the company has received entitlements to build 350 units in Cambridge, Mass.<\/p>\n\n\n\n

Data centers’ long runway<\/h2>\n\n\n\n

The transition to cloud and AI will provide “long-term incremental demand” for data center companies, according to Andrew Power, CEO of Digital Realty, which owns an international portfolio of some 300 properties and has about 9 million square feet under construction.<\/p>\n\n\n\n

The actual use cases for AI are still fairly low, Power said, since many of the solutions are still being built. But the company is not waiting around. “We are building infrastructure for the evolution of infrastructure over time,” he said.<\/p>\n\n\n\n

And while the lion’s share of data center activity is happening in the U.S., there are ample opportunities to grow market share overseas. “No one wants all the AI infrastructure homed in the U.S.,” Power said.<\/p>\n\n\n\n

Powering and cooling data centers is still a challenge. While technological advances are helping the industry move toward “pain point solution,” it is a long-term problem, Power said: \u201cYou are not going to see one quick fix. It is going to take us and the energy industry to innovate.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Highlights from Nareit’s annual investor conference.<\/p>\n","protected":false},"author":756,"featured_media":1004760452,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,21783,21742,51037],"tags":[52299,52630,36123,32907,41921,34696],"class_list":["post-1004760451","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-investment","category-latest","category-trends","tag-bxp","tag-chatham-financial","tag-digital-realty-trust-inc","tag-easterly-government-properties-inc","tag-nareit","tag-philips-edison-grocery-center-reit-ii"],"acf":[],"yoast_head":"\nREITWeek Special Report: The Resilience of REITs - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Key takeaways from this year's REITWeek investor conference in New York.\" \/>\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\/reitweek-special-report-the-resilience-of-reits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"REITWeek Special Report: The Resilience of REITs\" \/>\n<meta property=\"og:description\" content=\"Key takeaways from this year's REITWeek investor conference in New York.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/\" \/>\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=\"2025-06-04T11:43:29+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-06-09T12:13:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/06\/IMG_9700.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"400\" \/>\n\t<meta property=\"og:image:height\" content=\"327\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Therese Fitzgerald\" \/>\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\/reitweek-special-report-the-resilience-of-reits\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/\",\"name\":\"REITWeek Special Report: The Resilience of REITs - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/06\/IMG_9700.jpg\",\"datePublished\":\"2025-06-04T11:43:29+00:00\",\"dateModified\":\"2025-06-09T12:13:12+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/72a93f240402a8c7f4e56a69aed5f713\"},\"description\":\"Key takeaways from this year's REITWeek investor conference in New York.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/reitweek-special-report-the-resilience-of-reits\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/06\/IMG_9700.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/06\/IMG_9700.jpg\",\"width\":400,\"height\":327,\"caption\":\"BXP President & Director Doug Linde and CEO Owen Thomas discussed how they will grow FFO per share at Nareit's REITWeek conference. 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