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REITWorld 2010: Executives Guardedly Optimistic

11/15/2010 | By Clay Risher

REITWorld 2010: Executives Guardedly Optimistic
Distinguished commercial real estate executives exuded an air of guarded optimism about the industry on the opening day of REITWorld 2010: NAREIT's Annual Convention for All Things REIT at the Waldorf=Astoria Hotel in New York.

The Nov. 15 program featured a panel discussion hosted by AvalonBay Communities Inc. (NYSE: AVB) Chairman and CEO Bryce Blair, NAREIT's 2011 chair. The panel consisted of Mike Fascitelli, CEO of Vornado Realty Trust (NYSE: VNO); Archstone CEO Scot Sellers; Martin Cohen, co-chairman and co-CEO of Cohen & Steers Capital Management; and Guillame Poitrinal, chairman and CEO French REIT Unibail Rodamco (Paris: UL.PA).

Much of the panel discussion focused on the lessons learned during the "Great Recession." Blair kicked off the conversation, stating that the "last couple of years have been one heckuva capstone in our industry." Cohen identified the hallmarks of the commercial real estate companies that made it through the economic slump, including financial acumen and organizational strength.

"If you were to make a list of lessons learned in order to be successful in public REITs, it would be that those that were able to survive are now set to prosper," Cohen said.

Sellers addressed the differences in the current market for public and private companies. Sellers said there benefits to being a privately held company. However, although he declined to answer a question about his company's status, Sellers gave indications that going public might become a reality again for Archstone in the future. "Being private makes it tougher to access capital," he said.

Fascitelli offered his take on two of the country's premier commercial real estate markets, New York and Washington, D.C. He said Vornado is starting to see surging demand for development projects in Washington. New York is a different story, where high rents are hindering demand for building, according to Fascitelli.

Fascitelli appeared skeptical about the prospects for full-fledged rebound in which commercial property returns hit the levels they reached during the market's peak.

"The world is getting comfortable with lower returns, and the reality is we'll all need to adjust," he said.

Poitrinal expressed bullish sentiments regarding the future for listed property companies in Europe.

"Although REITs have only been introduced in the United Kingdom and France in the last five years, European REITs will have to take on ambitious plans to fulfill the unlimited appetite of investors," he said.

Poitrinal pointed out, however, that securitized real estate had failed to gain traction in some European countries: "It can be difficult to explain the concept of tax free and income generation in the same sentence to the average European investor."

Award Winners Announced

At the convention, NAREIT gave its annual Industry Leadership Award to Douglas Crocker II, who served as president and CEO of Equity Residential (NYSE: EQR) from 1993 to 2002.

The NAREIT Industry Leadership Award is presented annually to a REIT executive who has made a significant and lasting contribution to the growth and betterment of the industry. The award is presented in memory of Edward H. Linde, the late CEO of Boston Properties Inc. (NYSE: BXP).

The NAREIT Industry Achievement Award was given to Gilbert G. Menna, partner and co-chair of the Real Estate, REITs and Real Estate Capital Markets Group of the law firm Goodwin Procter. The award is presented annually to professionals serving the REIT industry whose acumen and integrity have helped heighten awareness and understanding of the value of REITs and publicly traded real estate. The award is presented in memory of E. Lawrence Miller, the former CEO of one of the industry's first REITs, Bradley Real Estate Trust, and a past NAREIT Chair.

Menna was recognized as an active participant in NAREIT's programs for two decades, providing counsel on tax and SEC issues. He currently is co-chair of NAREIT's SEC Subcommittee. He also was specifically recognized for his efforts that helped to lay the groundwork for the Modern REIT Era, the period that began in the early 1990s when the REIT industry largely transformed into an industry of public companies.