Fidelity Portfolio Manager Expects Active REIT Transaction Market in 2015

Steve Buller, portfolio manager at Fidelity Investments, joined REIT.com for a video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

Buller discussed the impact of rising interest rates on REITs in both the United States and abroad.  He noted that on a historical basis, there has been little correlation between REIT returns and higher interest rates.

During the last 18 months, however, the correlation between REIT returns and interest rates has become much tighter, according to Buller.  At the same time, he observed, investors are prepared for higher interest rates, “so there won’t be this knee-jerk reaction like we saw last year.”

Looking ahead to the major trends for REITs in 2015, Buller said he anticipates a number of corporate restructuring developments. Those would include increased mergers and acquisitions, more spinoffs of assets from existing portfolios and possibly increased buybacks of REIT shares that are persistently trading below their net asset value.

Globally, Buller said he sees a trend among companies toward developing more lucrative uses for their existing assets. Industrial properties outside of London and Sydney, for example, are being converted into residential spaces, he said.

“I think you’re going to see this trend increasingly in the listed property world, to unlock value,” Buller said.