Current commercial real estate fundamentals continue to support strong REIT performance, according to Brad Case, NAREIT's senior vice president, research and industry information.
"More and more, we're seeing signs that the economic recovery is firming up," said Case.
"There's less investor concern about the strength and continuation of that recovery."
He said that the signs show that the operating fundamentals of occupancy and growth will continue to improve.
Case also discussed the industrial sector, which he said has witnessed improved performance recently. He noted that the demand for industrial space generally increases when countries are engaging in more trade and need the additional warehouse space.
"Investors are confident there's going to be continued growth in trade, both domestically and overseas," he said.
In terms of today's IPO market, Case said that we may be at the beginning stages of a trend. He explained that, in many cases, companies that start out as not being publicly traded need an exit strategy or a way of disposing their investors' interest in those companies.
"One of the ways of doing that is by becoming a public company," he said. "So what we're seeing is the first signs of some of those companies ready to make that transition."
He attributes the desire to go public to the fact that companies expect to gain better access to capital, which they can then use to grow.
"I think they are hoping to get access to that capital for their own growth purposes, and it's likely we'll see more announcements along those lines," said Case.
American Tower Corporation (NYSE: AMT) converted to a REIT earlier this year, and Case noted that investors have responded favorably.
"American Tower has outperformed so far. Since they became a REIT their investors have gained 6.5 percent," he said.
Case pointed out that this may well be the start of a longer-term trend of infrastructure type assets being held within publicly traded REITs.
"Investors who have not had a way to invest in infrastructure are looking at this as the start or the opening up of that asset," Case said.
Economic Recovery Showing Signs of Improvement
02/28/2012
| by
Matthew Bechard