06/12/2012 | By Carisa Chappell
Jim Cramer, host of CNBC's "Mad Money," helped kick off REITWeek 2012: NAREIT's Investor Forum by addressing attendees at a lunch event on June 12.
After being introduced by Don Wood, NAREIT's chair and president and CEO of Federal Realty Investment Trust (NYSE: FRT), Cramer gave his take on how REITs have performed during the downturn. Unlike other industries, Cramer said REITs have been able to take a number of steps to successfully manage through the financial crisis in "shareholder friendly ways," such as refinancing and issuing equity.
"Your industry has done a remarkable job during this difficult time for the U.S. economy," Cramer said. "This industry has gotten it completely right; the vast majority of you came through with flying colors. You've taken the property that was in weak hands and you put it in your own strong hands."
Although he admitted to being a novice in the REIT industry, Cramer emphasized the importance of investors having a diversified portfolio that includes REITs. "So many have been blown out of this market just by owning one cohort," he said.
Cramer also spoke about the importance of educating his viewers on the intricacies of REITs. He said perceptions that the industry and its metrics can be "difficult and obtuse" still exist among the investing public.
"From the desire to measure FFO to the depreciation and tax status and what it means when a company converts from a REIT, it's important for me to educate viewers," he said.
Cramer also noted the importance of strong leadership for REITs. For a number of businesses, which are run by "boring, faceless managers," the executives in charge don't often impact how the company is analyzed, according to Cramer. That's not the case for REITs, he said.
"The person at the top is everything in this room," he told the audience. "You are throwbacks to the way business was done in this country."
Cramer spoke briefly on a few of the REIT sectors in particular. He said he has a positive outlook for the hotel and warehouse sectors, as well as the timber REITs. He also noted that retail REITs don't appear to have been affected by the growth of online retailers such as Amazon.