Stacey McEvoy, partner at Hogan Lovells, participated in a video interview in conjunction with Nareit’s REITwise: 2023 Law, Accounting & Finance Conference held March 21-23 in Phoenix, Arizona.
McEvoy commented on the overall health of the listed REIT market. She noted that REITs that have been successful in withstanding the challenging economic conditions are those that have had solid balance sheet management and have been able to control cost.
“Notably for some REITs, it’s been especially helpful that they’ve not had to refinance any debt during these interest rate hikes,” McEvoy said.
Higher interest rates and inflation have also caused buyers and sellers to struggle to align on real estate valuations, McEvoy pointed out. “That said, there does seem to some light at the end of the tunnel…I would expect the outlook for the rest of 2023 to be better,” she said, given an expected stabilizing of interest rates.
Turning to transaction activity, McEvoy said that as interest rates and inflation stabilize, and parties can align on valuations, there could be more joint venture activity. Joint ventures can offer an alternative to the debt market, she noted, and offer flexibility around structuring that could be appealing to REITs as balance sheet management continues to be a focus.
As for other issues on the near term horizon, McEvoy pointed to antitrust considerations in REIT M&A activity.