Michael Sleece, senior vice president of the REIT finance group at Capital One, joined REIT.com for a video interview at REITWorld 2012: NAREIT’s Annual Convention for All Things REIT at the Manchester Grand Hyatt in San Diego.
Speaking from the perspective of both a REIT borrower and REIT lender, Sleece said REIT borrowers are in good condition. He said they have plenty of capital from the banks and public markets.
“We have been very confident in the REIT market. We have expanded out business three-fold in the last 18 to 24 months just because of our core confidence in where REITs have been and how they have weathered the storm and where they are going forward,” he said.
Sleece added that investors should be confident in REITs for a number of reasons, including their “excellent management teams.” He said REITs have also made a concerted effort since the 2007 downturn to maintain conservatively leveraged balance sheets. He added that thd de-leveraging process helped REITs survive during the Great Recession.
“As a lender, this makes us very comfortable,” he said. “So, overall, it is a terrific investment. Management team, capital structure, access to capital—they really have it all.”
In terms of the lending, Sleece said one of the biggest changes from four years ago to present day has been lenders’ levels of comfort with the lending to well-capitalized REITs.
“There is not a safer bet to lend to from a lending standpoint,” he said. Sleece added that REITs have had sustained access to capital, even in the economic downturn.
“There were virtually no defaults, and there was no bond holder or lender that lost any money,” Sleece said.