REITS IN VOGUE
|NYU Schack Institute’s 16th annual REIT symposium last week in NYC was like flipping through a September issue of Vogue—full of top names and the latest trends in the industry. Some Chicagoans (or REITs with heavy Chicago interests) made an appearance. For starters, Equity Residential CEO David Neithercut (center, with Host Hotels & Resorts CEO Edward Walter and Green Street Advisors chair Mike Kirby) says multifamily fundamentals couldn’t be better, but acquisitions are difficult; there’s still a lack of product on the market, and land sales don’t have sensible yields. Lodging saw a45% decline in EBITDA from ’07 to ’09, and has only made back 3% to 4%, Edward says. Acquisitions are still at meaningful prices versus replacements, and there’s opportunity in redevelopment, particularly ‘80s-vintage hotels.|
Every time there’s an event like Japan’s earthquake, cash trying to find a home comes in for the short-term, says UBS Investment Bank vice chair Jackson Hsieh (right, with Forest City Enterprises CEOCharles Ratner, ProLogis CEO Walt Rakowich, and Moody’s VPMerrie Frankel). Walt says that he doesn’t see REITs leveraging up in the near future (ProLogis’ acquisitions will be leveraging neutrally or positively). Debt capital is available for residential but not the LTVs you once saw, says Charles, who recently closed a deal at80% LTV with a 5.5% interest rate through the FHA. For retail, you have to demonstrate significant pre-leasing, while office product requires a 70% to 80% lease-up. Overall, expect $5B to $7B in unsecured debt issuances this year, says Merrie.