Bayle Smith, senior vice president, advisory services at Green Street, participated in a video interview during Nareit’s REITwise: 2024 Law, Accounting & Finance Conference held March 19-21 in Hollywood, Florida.
Smith highlighted a prevailing sentiment that while there are signs of improvement, there remains a noticeable gap between buyer and seller expectations, particularly in the private market. According to Smith, although there has been progress since last fall, elevated debt costs and pricing disparities persist, hindering transaction fluidity. He expressed optimism for potential Federal Reserve intervention later in the year to alleviate these challenges.
Meanwhile, Smith suggested that as market values stabilize, appraisal values may eventually catch up, potentially stimulating transaction volume in the private market.
Regarding the public side, Smith noted that REITs have shown resilience, with many trading around net asset value (NAV) or at slight discounts. As the private market potentially eases, Smith anticipates increased activity and improved performance among REITs trading below NAV.
Smith praised the REIT industry's handling of the increased interest rate environment, citing healthy balance sheets and strategic debt management. However, he acknowledged that while some REITs with solid balance sheets may pursue acquisitions, others may find the current cost of capital prohibitive.