4 Quick Questions with David Lazarus

David Lazarus, Senior Managing Director, Eastdil Secured Wells Fargo

1/29/2014 | By Sarah Borchersen-Keto

Published in the January/February 2014 issue of REIT magazine.

REIT IPO activity in 2013 almost doubled 2012 levels. What fueled that surge, and do you see it holding on in 2014?

Obviously you had some historically large IPOs in 2013 that influenced the statistics. But I think what you see, more importantly, over a longer period of time is the securitization and institutionalization of real estate ownership. You are seeing more and more ownership in public hands, and I do think that’s a long-term trend that will continue.

I think we’re in a microenvironment, if you will, that will allow more companies to come public in the next year. We’re in a good part of the cycle where fundamentals continue to improve in real estate and in the economy overall. This should provide a backdrop in 2014 that will be conducive to more listed REITs and IPOs

Are there any transactions from 2013 that you think were transformative to the market?

M&A transactions are the most transformative things that happen in our markets. You’ve seen some places, like the net lease sector, where there have been massive consolidation that has certainly been transformative to the sector. Now, you’re going to have a $20 billion enterprise in American Realty Capital (NASDAQ: ARCP), and you still have Realty Income (NYSE: O), W.P. Carey (NYSE: WPC), Spirit Realty (NYSE: SRC) and others that are all quite big, so you’ve seen massive consolidation in that space.

You see a similar pre-consolidation landscape in other sectors, and you wonder if you have the dynamics in those sectors, like the shopping center industry, for example, to create the same consolidation as you see in the net lease sector.

What trends will you be watching in the transactions market?

I think the whole non-traded trend is a very, very interesting aspect of our business that’s emerged. This idea that you have these massive portfolios being owned by individual investors that ultimately will seek liquidity either in the private asset market or the listed market has been a major change. Coming into this year, the amount of equity already invested in these vehicles –something like $80 billion—is just overwhelming and has been growing quickly. These [public, non-listed] REITs have traditionally not been long-term models as investors ultimately look for liquidity leading to listings or other monetizations.

Commercial real estate lending remained strong in 2013. What are you anticipating for 2014?

Wells Fargo has historic levels of deposits, as do many of its competitors, so I think banks are definitely in a posture of wanting to lend.

We are also seeing a tremendous amount of capital from other sources. Whether it is debt funds or CMBS (commercial mortgage-backed securities) shops, there’s a lot of lending capital. The market is evolving, as it normally does—which is to mean providing more aggressive loans, relaxing underwriting standards—and some of that is just that the underlying fundamentals are stronger, and some of it is that people are more willing to take risk, as they should be because the environment is better.

There’s a point at which you’re taking more risk and relaxing underwriting standards not because it makes sense for the environment, but because it makes sense in light of a given lender’s competitive dynamic. That’s when it becomes a little bit dicey.

I don’t think we‘ve reached that point. But I think we need to be careful as we have a very accommodative interest-rate posture and the Federal Reserve doesn’t seem to have the political will to try to restrain some of the exuberance in the financial markets.



David Lazarus is a senior managing director at Eastdil Secured Wells Fargo, where he heads the real estate investment banking group. He works with public and private real estate companies on all forms of capital raising and strategic activities. Prior to joining Eastdil Secured in 2011, Lazarus co-founded and served as president of EdgeRock Realty Advisors LLC, a boutique real estate investment bank focused on advisory activities.He also spent 13 years as a managing director in the Real Estate Investment Banking Group at Lehman Brothers.

Other Features

Sunder Raman
4 Quick Questions With Sunder Raman
What has been the biggest challenge in terms of launching REITs in India? The main challenge in establishing a framework for the new product is to...
Cliff Majersik
4 Quick Questions With Cliff Majersik
True or false: Many of the practices considered to have the best “bang for the buck” when it comes to promoting energy-efficient buildings are...
Kenneth Campbell
Four Quick Questions With CBRE Clarion Securities Co-founder Kenneth Campbell
Kenneth Campbell had a front-row seat shortly after the birth of the REIT industry, founding the first REIT-dedicated publication, Realty Trust...
Ken Kies
Four Quick Questions With Federal Policy Group's Ken Kies
Ken Kies is the managing director of the Federal Policy Group, LLC, which advises clients on tax policy matters before Congress, the Treasury...
Sean Ruhmann
Four Quick Questions With NEPC's Sean Ruhmann
Sean Ruhmann is a partner at investment consulting firm NEPC, LLC and heads the firm’s real estate and real assets research group. Prior to joining...
Four Quick Questions With Jim Fetgatter, Chief Executive, AFIRE
Jim Fetgatter has served as chief executive of the Association of Foreign Investors in Real Estate (AFIRE) for more than 20 years. AFIRE represents...
David Kiron of MIT Sloan Management Review’s Big Ideas Initiative
Where does sustainability stand today in terms of being a strategic corporate priority? In our surveys , about 65 percent of companies report that...
Mark Decker Jr.
Four Quick Questions With Mark Decker Jr. of BMO Capital Markets
Mark Decker Jr. is a managing director with BMO Capital Markets and head of the firm’s U.S. Real Estate, Lodging & Leisure Group. Since the...
Scott Schaevitz
Scott Schaevitz, Co-Head of Americas Real Estate Investment Banking, Barclays
Scott Schaevitz is co-head of Americas real estate investment banking with Barclays. Prior to joining Barclays in 2008, he served as a Managing...
Jeremy Banoff
Jeremy I. Banoff, Senior Managing Director, FPL Associates L.P.
In general, what were the key findings of the 2014 NAREIT Compensation Survey in terms of hiring practices? This year’s survey findings included...