1/2/2013 | By Carisa Chappell
Before the New Year officially began, REIT.com spoke with several industry insiders to get their opinions on what they think will be dominant trends for the REIT market in 2013.
Steven Buller, vice president and portfolio manager with Fidelity Investments, said he expects REITs to continue to outperform other asset classes in 2013.
"This may surprise people given how well REITs have done since March 2009," he said, adding that the improvement in fundamentals is due to a limited supply and that REITs have a cost of capital advantage.
"REITs own approximately 10 percent of all real estate in this country. The ownership of that real estate is at a much lower cost of capital than that other 90 percent and they are exploiting that advantage through acquisitions," Buller said.
Amos Rogers, CEO of The Tuckerman Group, agrees that it will be more of the same for 2013. He said that one of the big stories of the year will be that REITs have held up well again, despite the macro-economic environment.
"I think it's going to be that the investors continue to value the income," he said. "I also think the fact that the underlying fundamentals in these stocks are going to support growth into the next year."
Michael Torres, CEO of Adelante Capital Management, said he counts resilience as a dominant trend for REITs this year. He said that tenants are committed, occupancies are rising and consumer confidence is "still reasonable high."
"People want to make money and so they need space to be able to do that," he said.
Frank Haggerty, portfolio manager, said that he intends to keep an eye on the initial public offering (IPO) market as 2013 has the potential for new IPOs.
Additionally, he said that capital deployment "could be an interesting story."
"I think once we clear through some of the financial and economic uncertainty we will see more capital being put to work by the public companies and new investment opportunities," he said.
While he said some of the uncertainty as it relates to the elections has cleared up, he pointed out that there's still some uncertainty when it comes to policy making in Washington.
Ralph Block, author of "Investing in REITs," said he thinks that the dominant theme for REITs over the next 12 months will be that cap rates will continue to decline and property values will continue to increase.
"We're going to have, no matter what the political landscape, a slow growing economy, low interest rates, and I think people are going to be ever-increasingly looking for stable cash flows," Block explained.