Louis Taylor, partner and senior vice president with Paulson & Co., joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.
Taylor discussed the outlook for IPO activity in 2014.
“I think activity in 2014 is going to be similar to 2013,” he said. “I think once again, it’s going to be driven by private equity – it’s always a little unpredictable about what’s going to come out. I think the year is going to start off with a bang, especially because I think it’s likely that the Hilton IPO will come first, although not a REIT, a very big deal that will certainly have an impact on the lodging sector, and certainly draw a lot of attention to real estate, and I think the lodging REITs.“
Taylor shared his opinion regarding where REIT investors should focus when deciding where to allocate their money.
“I think they’ve got to stick with the basics,” he said. “Are you getting a decent value, are you getting good growth, is growth stable, or is it accelerated – are their visible catalysts to that growth, will the dividend grow? So, I think if you stick with the basics - is the management team a good steward of capital - I think you’re going to do okay.”
Taylor also described 2013 in terms of commercial real estate recapitalizations and restructuring, and where he sees those trends going in 2014.
“I would describe 2013 as the calm before the storm,” he said. “Because, what’s going to happen is the commercial mortgage backed securities (CMBS) maturities are going to triple over the next three years, and in doing so, you’ve got a lot of 2006 and 2007 deals that were highly leveraged, overvalued, and that’s going to trigger a lot of restructurings and recapitalizations. I think the REITs are going to be right in the center of that, in terms of helping those owners and properties recapitalize themselves, and get in the right hands. So, I think the REITs themselves could have another spurt of growth in their asset base a year or two out.”