A panel of REIT CEOs at Nareit’s REITworld: 2020 Annual Conference discussed the ongoing economic impact from COVID-19 and their expectations for 2021.
Nareit Chair James Risoleo, president and CEO at Host Hotels & Resorts (Nasdaq: HST), moderated the session. Panelists included: Victor Coleman, chairman and CEO of Hudson Pacific Properties (NYSE: HPP); Susan Givens, CEO of New Senior Investment Group (NYSE: SNR); Brian Kingston, CEO of Brookfield Property Partners L.P. (Nasdaq: BPY); and Mark Parrell, president and CEO of Equity Residential (NYSE: EQR).
Coleman opened the session by emphasizing that widespread economic recovery and future growth are solely dependent on the development and distribution of a successful coronavirus vaccine.
Kingston added that despite recent encouraging vaccine news, he doesn’t see economic recovery “immediately around the corner,” but he hopes it will emerge in the second half of 2021.
“As soon as people could see the other side of it [and] felt like there was a light at the end of the tunnel, then they get back to work, they get back to spending, they get back to hiring,” Kingston said.
Parrell called widespread school closures “a significant impediment” to life returning to normal, and noted that restaurants, entertainment venues, and public transit must all return as well.
“I’m an optimist that by the middle of next year, we’ll see significant improvement in the tempo of office occupancy and the interest of people living in the cities again,” he added, including cities like New York and San Francisco that were hit particularly hard by the pandemic.
Givens pointed out that consumer behaviors are changing through the second coronavirus wave, with an apparent need to “get back to normal...get back to work, and get back to resuming their activities.”
Coleman said that Hudson Pacific Properties’ portfolio, which operates in the motion picture and entertainment industry niche within the office sector, has remained at a 95% paid level throughout the pandemic. Kingston added that office REITs have been more fortunate than hotels, for example, because “when we have 10% of the people in the building, we’re still collecting 100% of the rent.”
The panel agreed that the pandemic is not likely to materially change their businesses permanently, but Givens said it has accelerated the use of technology among the senior population, which has been a positive for growth.
“I hope that what will happen when all the dust settles from this, people will actually see that senior housing did okay through all of it,” she said. “People were safe in senior housing, they actually had meals [and] they had activities.”
Parrell said the pandemic has likely accelerated a “dispersion” trend with people moving to many new markets, and as a result, residential REITs will end up owning more buildings across more markets as well.