Average Credit Rating for Large REITs Likely to Increase

Mark Streeter, managing director and head of REIT credit research at J.P. Morgan Chase, participated in a video interview at Nareit’s REITwise: 2019 Law, Accounting & Finance Conference in San Antonio.

Streeter was on a panel at REITwise focused on real estate capital markets, which he noted are in “good shape” for REITs this year. He also said that while studies show a correlation between low leverage and REIT stock performance, he believes the sweet spot for leverage is in the 20 percent to 35 percent range.

Looking down the road, Streeter said he expects the average credit rating for large, institutional quality REITs that issue unsecure bonds to continue to increase.

“We’re going to see more A-rated REITs,” Streeter said, adding that ratings agencies will upgrade REITs in part as they continue to delever their balance sheets.