REIT RUSH
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US REITs have been on the run lately, their performance nearly double that of the broader equity market in the first five months of '11, we learned yesterday at NAREIT's REITWeek. Over 1,000 investors crowded the Waldorf-Astoria to hear presentations of 100 REITs, and it continues today. Some stats to chew on: the self-storage sector topped other REIT market sectors in the first five months of this year, with an 18.4% gain. Among the primary food groups: the office sector led the way with a 17.8% gain, followed by apartments (16.9%), industrial (16%), and retail (13%). Within the retail sector, regional malls drove performance with a 17.6% gain. And leading the way for investor return over the past 12 months was industrial (45.6%), apartments (38.7%), retail (34.5%), and office (29.3%). |
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| Keynoting was Roubini Global Economics founder and NYU professor of economics Nouriel Roubini, dubbed "Dr. Doom" byNew York Times Magazine. But his outlook was only doom-ish. Yes, there's the crisis in the Middle East, Japanese earthquake, commodity prices, and an unsustainable fiscal deficit. But the market has been resilient despite several shocks, and there are things going our way: a global economic recovery, lowered risk, corporate balance sheets in better shape, an improving CRE market, and long-term growth prospects in emerging markets. There have been talks of a global economic slowdown, but optimists are saying it’s just a soft patch. Potential rough spots: painful deleveraging in the public and private sectors, unemployment, government debt, the periphery of the euro zone, and loss of competiveness in the US. |
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| Say hello to the new ProLogis, less than a week after the completion of its merger with AMB Property Corp. Co-CEOs Hamid Moghadam and Walt Rakowich were joined by CFO Bill Sullivan(center) and say there’s less industrial demand in the US than the REIT had hoped, while there’s a pick-up internationally. The real activity will come from Japan, where building owners residing in 30- to 40-year-old buildings post-earthquake will reconsider their properties and drive development starting at the end of this year. One of ProLogis’ priorities is capitalizing its Japan fund, and it needs to attract third-party fund structures to supplement its income. Another: recycling $2B to $4B worth of assets over the next three years to capitalize its funds, new development, and a modest acquisition pipeline, as well as deleverage its balance sheet, which is currently in the low-40s (they hope to get down to 30%). |
