Capital Market Volatility to Continue, Goldman Sachs Banker Says

Neil Wolitzer, managing director at Goldman Sachs & Co., joined REIT.com for a video interview at REITWise 2016: NAREIT’s Law, Accounting and Finance Conference at the Marriott Marquis in Washington, D.C.

Wolitzer moderated a panel at REITWise on the state of the capital markets. He identified three main takeaways from the discussion:

  • Volatility is here to stay in the equity markets;
  • Specific volatility will be evident in the debt markets; and
  • The jury is still out on the debate between public and private market valuations.

Wolitzer described the outlook for the debt markets as a “tale of two cities.” Financing will be available for high-quality assets, he noted, but there could be challenges for other types of financing, such as the commercial mortgage-backed securities (CMBS) market.

“If you have an asset that was traditionally financed in the CMBS market, you’ll find that it’s going to be a little trickier,” Wolitzer said.

Meanwhile, Wolitzer said he expects privatization activity to be somewhat muted.

“People are feeling good about their businesses, which will be an impediment,” to privatizations, he said. Furthermore, memories of higher stock prices remain in the minds of many executives, added Wolitzer, curbing their enthusiasm for taking action at this time.

Wolitzer also said the environment for creating new REITs is “a little tough” at this time due to the abundance of private equity capital and the discounts to net asset value (NAV) occurring  in the public markets.