Credit Markets Open for REITs
12/03/2012 | by Matthew Bechard

Merrie Frankel, vice president and senior credit officer with Moody's Investors Service, 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.

Moody's Investors Service provides credit ratings, research, and risk analysis. The company's ratings and analysis track debt covering more than 110 countries.

Frankel discussed the credit markets and said that they are "doing well." She added that the there's great liquidity for public REITs and that the issuance has been unprecedented.

"So far there's been approximately $60 billion in issuance this year. Definitely the public markets have been open for companies and they've had access for all four quadrants: debt, equity, public and private," she said.

However, Frankel said it's "almost a tale of two cities," because the small and medium private real estate firms haven't always had the same success as public companies when it comes to accessing the amount of capital that they need.

Frankel also said that she expects to see companies continue to deleverage in 2013 as they have been doing in 2012.

"As long as they need the capital, they are going to access the market and they are going to deleverage because one thing that they found in the recession is that liquidity's a good thing," she said. "So we do think that they will continue to go to the market, take down their lines of credit, use that money for acquisitions, and some of them say they just want to keep some powder dry to see if any opportunities come up."

While there are a lot of  factors in favor of REITs, Frankel said some possible causes for concern include the much talked about fiscal cliff and the uncertainties in Europe.

"We think until these issues are resolved it's going to be a little harder for REITs and any public companies to push NOI growth," she said.

Additionally Frankel said that every sector has its particular challenges, whether it's consumer sentiment for resale or global trade for industrial.

"But the bottom line of all of this is until we have jobs it's going to be harder to push a lot the need for space, NOI growth, spending and the ability to pay for all of this," she said.