07/22/2016 | by
Allen Kenney

Look for consolidation to come in the single-family housing sector, according to David Auerbach of Esposito Securities.


In the latest episode of The REIT Report: NAREIT's Weekly Podcast, David Auerbach, an institutional REIT trader with Esposito Securities, talked about the latest developments in single-family REITs, the impact of online retail on industrial REITs and how elevating real estate to a headline sector under the Global Industry Classification Standard (GICS) will increase the visibility of REITs.

In the wake of the recent news that Blackstone L.P.’s Invitation Homes may be going public, Auerbach rebuffed the idea that the news could signal more single-family REITs undergoing initial public offerings (IPOs).

“I personally feel that we’re going to see more consolidation,” he said. “I don’t know if the market really has an appetite for multiple public companies, as in more than five public companies that focus on the single-family housing rental space.”

Regarding industrial REITs, Auerbach said the sector is still in the early stages of absorbing the impact of the growth of e-commerce. He pointed out that industrial REIT Prologis (NYSE: PLD) reported strong performance in its latest quarterly earnings stemming from online retail’s effects on its business. “I wouldn’t be surprised to see more of the industrial REITs knocking on the online [retailers’] doors to say, ‘What can we do for you?’”

Lastly, Auerbach commented on the changes coming to the REIT industry as a result of the GICS move. REITs will receive more interest from a broader range of investors, according to Auerbach.

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