The REIT approach to commercial real estate investment presents a number of advantages over others forms of real estate investment, according to Marty Cicco, senior managing director with investment banking advisory firm Evercore Partners Inc.
In a video interview with REIT.com at REITWeek 2012: NAREIT's Investor Forum in New York, Cicco said the benefits of REIT investment have proven themselves over the 20-year period since modern publicly traded REITs entered the marketplace. The benefits include transparency and liquidity, according to Cicco.
"What REITs really offer investors is an opportunity to invest with the best management teams and with the best assets throughout the United States and now the world."
Looking at the current state of the commercial real estate market, Cicco said the steps taken by REITs to re-equitize their capital structures and shore up their balance sheets have given them an edge in the acquisition market. As a result, more REITs have become acquirers of property. However, Cicco noted that REITs have been active in the transactions market beyond buying assets.
"I would say they have also been significant sellers. A number of companies that have reached into different product types have been sellers of assets that don't fit" their portfolios, he said. "I think REITs have been a seller of certain assets that they don't believe are long term or in their interest to hold."
In the second half of 2012, macroeconomic factors will play a key role in the performance of the REIT market, according to Cicco. Some of the dominant trends and themes in the next six months will likely include the issues plaguing the global financial markets and investors' feelings of uncertainty in the current economic climate, he said.
"You have to start with Europe, given that the turmoil there will affect the rest of the world. That's our near-term issue," Cicco pointed out.
Cicco said he also expects that levels of volatility will continue to reach all-time highs throughout the balance of the year. He attributed that trend in part to the upcoming national elections in November.