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REIT Fund Manager Finding Value Overseas

12/18/2013 | By Sarah Borchersen-Keto

Tim Pire, managing director of public real estate securities at Heitman, recently joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Pire was asked about the REIT sectors that are most interesting at the moment. He responded that investors should position themselves in sectors with shorter lease durations, such as lodging, that can take advantage of higher economic growth. Some mid-to-longer-duration sectors, including office and retail, are also likely to do well, according to Pire.

Apartments and self-storage are both good sectors, Pire added, but “the question is (that) they have done so well so far that the rate of growth may just not be quite as strong.”

Pire said he is a little less excited by the health care sector and the triple net lease sector, which have been dramatically helped by low interest rates.  However, Pire noted that from a positive perspective, “the triple net lease sector still sees great opportunity in terms of properties to acquire, and we’ll see more triple net lease companies potentially coming public.”

Health care REITs, meanwhile, have changed over time, Pire said. He explained that while some are still in the triple net lease structure, many more companies have taken advantage of the REIT Investment Diversification and Empowerment Act (RIDEA) to become operators. “That helps those companies still generate stronger growth, even as the cost of capital may move up a little bit higher,” Pire said.

Turning to international markets, Pire remarked that, overall, “we have liked what’s been going on in Europe, and it’s not that economic growth is accelerating dramatically faster, but it’s better.” Pire added that “we see opportunities in terms of where stocks are trading and the relative underlying value of the real estate.” Furthermore, capital is moving back to the market, which is going to be supportive overall of pricing, according to Pire.

“Overall we see Europe as an interesting market right now,” he said.

Pire also noted that the most common topics of discussions with investors currently revolve around interest rates and their impact on REITs, supply fundamentals and initial public offerings (IPOs).

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