Low Rates and Controlled Supply Create Favorable Environment for REITs: A Wall Street Transcript Interview with Alexander D. Goldfarb, Senior REIT Analyst at Sandler, O'Neill + Partners, L.P.
67 WALL STREET, New York - June 27, 2014 - The Wall Street Transcript has just published its REITs Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Apartment, Lodging, Self-Storage and Office REITs - Consolidation Activity - REIT Access to Capital - Residential and Commercial REITs - Correlation Between Macroeconomy and Real Estate - Agency Mortgage REITs - Supply and Demand Dynamics - Favorable REIT Fundamentals
Companies include: Boston Properties Inc. (BXP), Salesforce.com (CRM), Vornado Realty Trust (VNO), Parkway Properties Inc. (PKY), Essex Property Trust Inc. (ESS), Kimco Realty Corporation (KIM), Developers Diversified Realty (DDR), Simon Property Group Inc. (SPG) and many more.
In the following excerpt from the REITs Report, an expert analyst discusses the outlook for the sector for investors:
TWST: What's your overall take on the REIT space right now?
Mr. Goldfarb: Clearly, this year has been a nice relief from last year's post-Bernanke selloff. On one hand, it's not a surprise that the 10-year has retraced this year. This year and last year are really no different in our view, and our view is that this low-rate environment persists through the November of 2016 election. We do like the new Chairwoman Yellen; I think she has done a very good job and articulated an accommodative stance, while at the same time dialing back the QE.
Overall there's really nothing in our view that's going to change the economic trends. We don't see economic growth accelerating, we see the job formation staying in this 200, 250-range type number, plus or minus, GDP in the 2.5% range, and that we're going to just tread through this. If you look globally, there is not really a lot of demand elsewhere. You're not seeing headlines saying more about accelerating growth in this part of the world or that part of the world. It's more concern about China, Brazil, etc.
And in the U.S., not surprisingly, the housing market has been impacted by rising rates. First-time homebuyers continue to have trouble. All that to us means that rates should stay low, and with limited new supply of real estate and a continued positive spread between borrowing cost and acquisition yields, it's a pretty good Goldilocks-type environment for the REITs.
TWST: How are the real estate market fundamentals faring? Anything new in that regard?
Mr. Goldfarb: Real estate continues to do well. Office is one sector where you are seeing fundamentals accelerating, and that's typical; it's a late-cycle play. That's what we expected toward the end of last year, and that's been playing out. The apartments have certainly benefited this year as finally people have realized that they are not going to be overwhelmed by...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
