REITs Update

NYU Schack Institute?s 16th annual REIT symposium last week in NYC had 700 attend (including our NYC reporter Amanda Marsh) and kicked off with a two-year outlook from Equity Residential CEO David Neithercut (center, with Host Hotels & Resorts CEOEdward Walter, and Green Street Advisors chair Mike Kirby). He says multifamily fundamentals are good but acquisitions are difficult; there's still a lack of product for sale, and land doesn?t have sensible yields. Lodging saw a 45% decline in EBITDA from ?07 to '09, coming back only 3% to 4%, Edward says. Purchases are still at meaningful prices versus replacements, and there's opportunity in redevelopment, particularly '80s-vintage hotels.
For REIT financing, it's been a busy few months—there's been $35B in M&A activity, $20B in stock issuances, and $15B in debt issuances, says JPMorgan Securities managing director Murray McCabe (right, with Mack-Cali CEO Mitchell Hersh, Brookfield Office Properties CEO Ric Clark, and Citi Investment Research & Analysis managing director Michael Bilerman). Interest rates will have meaningful pressure, says Ric, and the economy is clearly getting stronger, but the government is less likely to get involved with the rates, leading to a 50 bps rise by year's end. ?Finance anything you can today,? he urges. And be prepared if factors likeinflationary pressure and overseas events influence the economy, leading to a ?second leg down,? says Mitchell.

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