Donald Hammett, partner at Alston & Bird, sat down for a video interview during Nareit’s REITworld: 2025 Annual Conference in Dallas on December 8-11.
Hammett shared a wide-ranging view of the regulatory, capital, and market forces shaping REITs as the industry looks ahead to 2026. He said that while 2025 did not bring sweeping tax changes, he pointed to several meaningful developments that could have lasting impact.
One notable shift involves taxable REIT subsidiaries (TRSs). Under recent legislation, the allowable percentage of a REIT’s assets held in TRS stock increased from 20% to 25%. Hammett said the change “will allow REITs greater flexibility to use TRSs” and “help to give them a competitive advantage when they’re dealing with non-REIT competitors.”
He also highlighted proposed IRS and Treasury regulations affecting foreign investment in U.S. REITs, noting that eliminating certain look-through rules could simplify structures and encourage additional global capital.
From a sector perspective, Hammett emphasized stark contrasts across real estate. Data centers remain exceptionally strong, driven by AI, 5G, and digital infrastructure demand. Office continues to face headwinds, while multifamily sits in a transitional phase as recent supply is absorbed. Retail, particularly high-end assets, has also shown renewed strength, he said.
Looking ahead, Hammett expects increased multifamily development and more institutional joint ventures, observing that “you are going to start to see more multifamily development” as vacancies decline and capital conditions improve.