Fitch Analyst Says REIT Fundamentals Holding Firm

Steven Marks, managing director with Fitch Ratings, joined REIT.com for a video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

Marks said fundamentals in the real estate market generally held up in the first half of 2015 throughout all sectors. Fitch Ratings is projecting growth in same store net operating income (SSNOI) along the lines of 3 percent to 4 percent this year.

“Demand remains relatively steady,” said Marks, noting that GDP growth has continued.

Marks also pointed out that banks are taking a cautious approach to lending for new development. Overall, new supply coming online is muted, he said.

“We’re not seeing supply being a big issue,” Marks said.

Marks said the development that is occurring is generally being financed “in a smart fashion.”

“As long as you’re not funding all of your development with debt, we think that companies can develop prudently,” he said. More companies are recycling capital through asset sales, according to Marks, which is seen as a less dilutive approach.

Looking at the next six months, Marks said he’ll be tracking the number of mergers and acquisitions, how REITs are funding themselves and the potential for stock buybacks. Currently, the market is conducive to privatizations, according to Marks.