Steven Marks, managing director with Fitch Ratings, joined REIT.com for a video interview in Chicago at REITWeek 2013: NAREIT's Investor Forum.
Earlier in the year, Fitch Ratings had taken a favorable view of REITs' liquidity position. Marks discussed any possible changes to that view.
“If anything, we’re more positive,” he said. “We just put out a report about two weeks ago where we said that liquidity is the best ever as we analyze it.”
Marks share some of the conclusions of the recently published Fitch mid-year review of the state of the REIT market.
"The outlook on the overall equity REIT sector is stable, and that stable outlook is driven by a couple of things," he said. “On the positive side, one is that access to capital has been fantastic, liquidity has been quite strong and fundamentals have been improving, as well, generally across most of the sectors. Those positive elements are balanced by a couple things. One is leverage that we still believe is elevated in this sector, and, secondly, is the overall macroeconomic environment, which remains slow.”
Marks also discussed the potential for lending standards to tighten for REITs.
“If anything, we see a loosening on the secured side,” he said. “As it relates to the unsecured side, we see continued strength. If there was ever an opportunity to issue and access the unsecured bond market, the time is now.”
Marks talked about the stories he is watching in the second half of the year.
"There are two things we are paying closer attention to,” he said. "One is the extent to which REITs go out on the risk spectrum, and that could be in the form of speculative development. It could be in the form of highly levered M&A transactions or M&A transactions that are potentially not good fits. On the flip side, we are potentially looking at growth in the IPO market."