Justin Brown, senior vice president, advisory & consulting, at Green Street Advisors, participated in a video interview at Nareit’s REITworld: 2018 Annual Conference.
Brown commented on some of the key storylines in REIT markets around the world. In the United States, he pointed to the pricing disconnect between public and private real estate. “It’s really suppressed capital markets activity; we’ve seen fewer IPOs and less secondary equity offerings,” he said. However, activity has been present in non-traditional REIT sectors, which continue to be a larger piece of the REIT market in the U.S.
In Europe, Brown also highlighted the emergence of non-traditional REIT sectors, while Asian REIT markets are “really poised for growth.” India, for example, recently finalized REIT legislation, offering investors the chance “to invest in stabilized, institutional-quality real estate,” he noted.
Brown also looked at some of the challenges global REIT portfolio managers face when comparing the relative attractiveness of REITs across borders. He noted, for instance, that the corporate level taxation structure is not universal across the board. Capital expenditures should also be watched, he added, along with sovereign risk.
As for the challenges emerging market REITs face when trying to attract capital from global REIT dedicated investors, Brown stressed the need for externally-managed REITs to contractually align the interests of the external manager with the public market shareholder. He also noted that emerging market REITs should translate their performance metrics into those that REIT investors know well.