Global financial services firm Cantor Fitzgerald & Co. officially launched coverage of the U.S. REIT sector on Jan. 31.
The members of Cantor's REIT research team all came to the firm from FBR Capital Markets & Co. David Toti and Sri Nagaragan will serve as managing directors of the group. They will be joined on the REIT team by Evan Smith and Gaurav Mehta.
Cantor has always had its eye on the REIT sector, according to Natasha Boyden, head of U.S. equity research at Cantor.
"We have always had a deep interest in the REIT sector," Boyden said during an interview with REIT.com. "Just adding David and Sri broadened the scope of the firm's interest in the sector and gives up a depth and expertise we didn't have before, so we jumped at the chance."
David Toti said that more investors appear to be interested in REITs today than they were 10 years ago.
"The sector has been outperforming, and that always draws a lot of attention from investors," Toti said. "Also, the perception of institutional quality has been raised by better disclosures, and the dividend yield stocks in today's world are attractive."
2012 Outlook
Toti said the firm has a positive view on REITs. He said a preliminary analysis suggested that in 2012, the office sector will outperform the other real estate sectors. Meanwhile, he said he's anticipating modest gains in both the apartment and self storage sectors.
Toti said he anticipates that REITs will modestly outperform the broader market this year. However, he said interest rate shocks or any major changes in the economy could pose challenges for the industry.
"What we see for REITs today is similar to the Goldilocks economy, not too hot and not too cold," Toti said. "If the economy picks up, our view is that the S&P [500] will become more attractive relative to REITs. But in a recession, all will under perform."
Sri Nagaragan speculated that REITs would have the most opportunities to acquire favorably priced properties in the second half of the year.
"We think 2012 will be a long-awaited year of value-added acquisitions," he said. "REITs have had plenty of dry powder. Stable REITs will venture into value-added acquisitions in their own backyards."