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Investment Strategist Pleasantly Surprised by Health Care, Net Lease REIT Sectors

06/27/2014 | By Allen Kenney

Tim Pire, managing director with Heitman, joined REIT.com for a video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York. Pire serves as chief investment strategist of Heitman’s global real estate securities group.

Looking at the performance of the REIT market, Pire said the health care and triple-net lease REIT sectors represent pleasant surprises in their performances in 2014. Pire attributed some of their success to interest rates trending lower than expected.

Conversely, Pire singled out retail REITs as a sector that underperformed expectations in the early part of 2014.

“That was driven by the generalist fear of Internet retailing,” he said. “We don’t believe brick-and-mortar retail is going away. The retailers are looking at both Internet shopping and the properties that the retail REITs own as avenues of distribution.”

Pire indicated that the market could be underestimating the lodging sector. Fundamentals on the whole are promising for the sector, according to Pire, including trends in travel data. Pire picked out the suburban office sector as another that “has some legs.” As the economy recovers, companies will need more space to accommodate new hires, he pointed out.

Finally, Pire turned his attention to international real estate investment markets. Pire said he has a bullish outlook for the Japanese market, where he expects to see positive economic growth as the national economy adjusts to the implementation of a value-added tax increase earlier this year. Pire pointed out the Japanese real estate market is enjoying improvement in fundamentals, such as increasing land values, higher rents and better occupancy rates.