The United States currently has some of the best market conditions in the world for commercial real estate, according to Trevor Bond, president and CEO of W.P. Carey and Co. LLC (NYSE: WPC).
"Interestingly, the U.S. seems to have won the battle of the uglies," Bond said in an interview with REIT.com in New York at REITWeek 2012: NAREIT's Investor Forum. "We have our problems, but by and large, the U.S. is doing well relative to the rest of the world now."
He said employment is starting to grow slowly, and added that the U.S. is still a "manufacturing powerhouse."
In terms of other markets, Bond said the company has been cautious in taking first steps in volatile markets. While Brazil and India have been favorites of investors for years, W.P. Carey has been careful when it comes to investing there, according to Bond.
"I'm glad we have been cautious. They have some deprecation of their currency and some political instability," Bond explained. "But South Korea looks pretty good, and we have seen some good opportunities in Japan as well."
Bond said W.P. Carey employs a variety of hedging strategies to insulate itself against uncertainty and trouble in the global markets, as is the case right now in Europe. As a result, the company is "pretty well covered for the next five years," he said.
On a broader basis, Bond said the biggest problem affecting global business is overleveraging.
He also noted that governments are carrying too much government debt.
"If you really think about the true risk to the investor, I think that the bond holders, the holders of sovereign debt, bear much more risk," said Bond, adding that W.P. Carey invests in companies and does not buy sovereign debt.
Bond also expressed concern over "the risk of contagion," meaning that a deeper recession could threaten all corners of the economy.
"As long as we made the right decision and pick tenants that pay their rent, it doesn't matter what's going on in the economy."
REIT Favors U.S. Market Conditions
06/28/2012
| by
Matthew Bechard