Banker Sees Expectations of Rate Hike “Baked Into” REIT Stock Prices
04/17/2017

Scott Eisen, head of North American real estate at Citi, joined REIT.com for a video interview at REITWise 2017: NAREIT’s Law, Accounting & Finance Conference in La Quinta, California.

Eisen moderated a REITWise panel on the state of the capital markets. Eisen noted that expectations of rising interest rates have already been “baked into” REIT stock prices.

He also commented on REITs trading at sizeable discounts to net asset value (NAV). Office REITs, apartment REITs, shopping center REITs and mall REITs trade at discounts to NAV of up to 30 percent, according to Eisen.

“Those are some meaningful discounts,” he said.

Eisen said he sees a “push-pull” between well-capitalized private markets and public market investors that seem to believe that either prices or NAVs have to decline.

“Either way, the expectation in the market is that prices could be going down from here,” Eisen said.

Meanwhile, Eisen said he has seen no real evidence of any regulatory impact on lending for commercial real estate. Banks are continuing to grow REIT lines of credit, and the commercial mortgage-backed securities (CMBS) market is “about as healthy as we’ve seen it in a very long time,” he pointed out.