Raymond James Banker Sees Fundamentals in Place for REIT Capital Formation

Vivek Seth, managing director and head of real estate investment banking at Raymond James, joined REIT.com for a video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

During REITWorld 2014, Seth moderated a panel focusing on trends in the capital markets. According to Seth, some of the main themes that emerged from the panel included the robustness of the markets and capital flows today, as well as the earnings power that REITs currently enjoy.

“Fundamentals are strong, and the tailwinds are there for us to really see some capital formation occur,” Seth said.

Another theme was: “how REITs are really coming into their own,” according to Seth. He pointed to the separation of real estate from the Financials Sector by the Global Industry Classification Standard (GICS), the leading global listed equity classification system maintained by MSCI Inc. and S&P Dow Jones Indices. Seth said the increased recognition of real estate is likely to produce further capital inflows into the sector.

Seth also commented on the impact of potential interest rate hikes on the REIT capital markets.

“My view is that it’s very hard for interest rates to go up significantly with all the quantitative easing that’s going on around the world. You have near zero interest rates in two-thirds of the developed world, and all of that money has to find a home,” he said.  

Meanwhile, Seth said he expects to see the profile of the single-family rental market rise.

“You have a valid sample set of companies, and the tail winds are still solidly behind them,” he said. “Initially, people thought they might be a trade and not a real business. I think that skepticism has disappeared, so that’s a theme I think you’re going to hear a lot more of over the next couple of years.”