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No Slowing Apartment REITs in 2012

11/16/2011 | By Matthew Bechard

The tailwinds currently pushing multifamily REITs show no signs of abating in 2012, according to Connie Moore, president and CEO of BRE Properties Inc.

In a video interview with REIT.com at REITWorld 2011: NAREIT's Annual Convention for All Things REIT in Dallas at the Hilton Anatole hotel, Moore discussed the latest trends in the apartment REIT sector and how her company is positioned to take advantage of the current market situation.

Demographic trends should continue to favor the multifamily sector, according to Moore, as the echo boomers enter the pool of potential renters. Additionally, although many of them are opting for single-family homes, a number of families are choosing to rent. Moore cited wages as one potential trouble spot, though.

"The interesting thing for us is that we've done all of this without a lot of job growth," Moore said. "What could turn this into some headwinds is if we don't ultimately get some wage growth. Without real wage growth, there will be a limit to how much we can push rents."

Moore said BRE has seen noticeable rent growth on the West Coast, and she expects that to continue for the next year to 18 months.

On the subject of BRE's capital structure, Moore said the company is well-positioned to address its debt maturities next year. The apartment REIT has a line of credit that matures in 2012, but, otherwise, she noted that BRE doesn't face any significant maturities before 2017.

"We feel like we're in a great position to have a very flexible balance sheet that will allow us to take advantage of opportunities," Moore said.

However, she cautioned that she doesn't expect those opportunities to be as plentiful as observers. She also pointed out that BRE has a robust development pipeline, which necessitates prudent capital management.

Looking ahead, Moore said she's interested in seeing how companies in the REIT industry address succession plans. A number have already either replaced longtime management teams or are in the process of doing so.

"I think the greatest gift to shareholders is having a succession plan that is flawless and seamless," she said.