Leupp was asked about the greatest opportunities in international markets for REIT investors. He identified two areas.
“One is in emerging markets where we’re seeing GDP growth in the 5-10 percent range year over year,” he said. “We’re invested in China and other parts of emerging Asia. We’re also invested in Latin America, and we think that’s a very interesting opportunity for investors. On the value side, we’re very excited about what we’re seeing in Europe right now. We’re not excited about the slow economic growth and high unemployment, but as a result of that, investors have shunned European stocks for a few years now. We’re seeing very interesting value in some of the great core markets in Europe.”
Leupp discussed the challenges in evaluating joint ventures in international markets with native partners.
“As an investor, it can be difficult to analyze,” he said. “Whenever any of the companies either that we’re looking to invest in or that we’re currently invested in looks to expand internationally, via a joint-venture partner, we try to do as much due diligence and research as we can about the potential partner or the partner that they’ve announced once we realize that the REIT that we’ve invested in has gone into partnership. It can be a tremendous avenue for international growth. Aligning with a local partner that knows local contacts, local tenants, local government officials, land-use regulations locally and the development process locally can be a huge benefit to expanding globally. But we have to do the due diligence on the partner and the individuals markets where the REIT is invested in.”
Leupp also discussed potential surprises in 2014.
“I’m going to step out on a little bit of a value limb here and say suburban office,” he said. “Some suburban areas that we like right now are the western part of Los Angeles along the coast, parts of the suburban Bay Area. I think that there are similar markets that look interesting in suburban Boston, suburban New York and suburban Washington, D.C.”