He discussed some of the sectors that his fund is currently targeting for investment.
“Two of the sectors that we like are the apartment sector and the regional mall sector -- the apartment sector from both a growth standpoint and a valuation standpoint,” he said. “In the regional mall space, it’s more a function of scarcity of assets. REITs own roughly 50 percent of all regional malls in the U.S. When you look at the high-quality malls it’s even a higher proportion.”
Overall, Curbo said that the supply-and-demand fundamentals are still favorable for REITs.
“In terms of the space market, I think the supply-and-demand fundamentals are still pretty good," he said. "I think we’ll see demand outpace supply, and that will result in rising occupancy rates, rising rents and rising dividends. So, absent an economic shock, I think that’s pretty good."
In terms of the capital markets, Curbo said REITs have benefitted from an environment with low economic growth and low interest rates. If that environment changes, then some of the capital flows that have been positive for the industry may ebb a bit.
“I think it really requires a focus on stock-specific, bottom-up-type investing, as opposed to top-down allocation, where it may not be as positive as it's been over the last several years,” he said.
With many REIT sectors at their long term-averages in terms of occupancy rates, growth will have to come from rents.
“So, we’re going to be looking at the companies that can grow their rents and also that can grow form a development and re-development standpoint,” he said.