Arthur Hurley, vice president and senior portfolio manager with Columbia Management, joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.
Hurley shared his opinion regarding the biggest surprise in the REIT market during 2013.
“I’m not sure it’s been a surprise for me, but I think many investors have been surprised at how well REITs have done in this rising interest rates environment that we’ve experienced,” he said. “I think what investors need to remember is that fundamentals remain strong in the space. Certainly, occupancies are either at or near all-time highs across most property types – landlords have been able to raise rents, market rents are continuing to rise, and you have a space where the lessons during the financial crisis have not been lost. What I mean by that is, balance sheets are very strong right now, and dividends are as secure as they’ve ever been.”
Hurley also discussed sectors investors may be underestimating in the coming year.
“I think one of the property types that people really should focus on is the apartment space,” he said. “It’s a sector that has underperformed for almost two years on a relative basis. During that time fundamentals have continued to be very strong. “
Meanwhile, Hurley talked about the types of investors that are drawn to REITs in the current market.
“I think the investors that continue to be drawn to this space are the ones that are the most disciplined, the ones that are attracted to the diversification efforts that REITs give investors,” he said. “Certainly, you have a unique return profile that remains in place, you have strong fundamentals – those aren’t changing anytime soon. You have strong balance sheets, and you have a space that has remained very disciplined to its core focus of providing stable income to investors, and those investors that are attracted to that are the ones that I think are most interested in the space right now.”