Broadstone CEO Says Rising Rates Causing Little Concern

Amy Tait, chairman and CEO of private REIT Broadstone Real Estate, joined REIT.com for a CEO Spotlight video interview at REITWorld 2016: NAREIT’s Annual Convention for All Things REIT at the JW Marriott Phoenix Desert Ridge.

Tait described overall investor interest in private REITs as “terrific.” She said Broadstone is raising equity every month on a regular basis at levels that are on par with the best the company has ever seen.

“I don’t expect that to change,” she commented.

Broadstone’s net lease operations will raise roughly $300 million in equity this year, Tait said. The Broadtree Homes single-family side of the business is “starting to get some momentum” and will probably raise about $60 million this year, she added.

Tait acknowledged that interest rate concerns have increased lately for Broadstone. However, current interest rates have already been anticipated in pricing, she explained, which have lessened any worries around the company.

“There’s still a very positive spread between cap rates and current borrowing costs for us, so I feel pretty calm about cap rates and valuations in our industry,” Tait said.

Interest rate movements could lead to some dislocation of deals in the short term , “I think [Broadstone will] do very well in the coming year,” Tait said.

Last year, Broadstone booked about $500 million in net lease acquisitions. “We’ll probably do a little bit less this year and have a similar pace next year,” she said.

Meanwhile, Tait said the company is focusing on home properties that are located in class-B, suburban markets with limited new construction. Broadstone is buying at levels that are “well below replacement cost,” and in markets where rents “are going up very favorably still.”