Investment Bankers Say REIT Outlook Remains Healthy
10/25/2017 | BY CHARLES KEENAN | NAREIT
There’s a current of concern drifting through some in the investment banking community over what they view as a maturing real estate market recovery. On the other hand, many bankers see more of the same in 2018 as gross domestic product continues its path of modest growth combined with low interest rates and open debt markets.
REIT magazine spoke with bankers to gauge their outlooks for the real estate market in the coming year.
What’s your general outlook for real estate for 2018?
Greg Steele: A GDP growth rate next year of around 2 percent, similar to 2017, would support a relatively healthy real estate environment and probably mean lower long-term interest rates over the next year.
Schecky Schechner: My outlook is neutral with a bias to the upside. We are nine years into a cycle that is already long. Opportunistic funds have to worry about multiples of capital and returns, so they are unlikely to invest in something with a five-year time horizon. But if you’re a sovereign wealth fund, and if we are going to have a downturn in two to three years, as long as you are buying the right real estate in the right market, you are OK.
Neil Wolitzer: On the private capital front, there is significant equity and debt capital ready to be invested in high-quality, well-located assets. On the debt side, owners have numerous borrowing options. The CMBS market is open and accessible to a wide variety of borrowers. Investment-grade bond issuers across a broad range of subsectors have also been enjoying a very constructive market.
Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.