The REIT Weekly – Industry Titans Share Opinions

The news in the world of REITs this past week has consisted of conference discussions of net-leases and where the industry is in terms of the real estate cycle. We also gain insight into the history and relationship between Maryland and its draw for REITs.

At the NYU Schack Institute of Real Estate conference, some major REIT players discussed the state of the industry and its future. American Realty Capital’s Nicholas Schorsch foresees a real estate shift in favor of the net-lease sector. Ronald Havner Jr., chairman, president and CEO of Public Storage agreed with Debra Cafaro, chairman and CEO of Ventas about the dangers of relying too heavily on net asset value.

More discussion at the Schack conference has experts claiming that the real estate market is at mid-cycle and poised to aid REIT growth in the coming years. Many observed the difficulty of acquiring Class-A assets, however Kimco Realty Corp.’s CEO, David Henry noted, “The market for B assets is strong today and getting stronger…it’s a wonderful time to take advantage of that and upgrade your portfolio.”

According to a video interview with Gordon J. Whiting, managing director of Angelo, Gordon & Co. net lease assets are a great way to generate yield. Since net lease assets now make up 8% of the REIT index and are no longer a niche product, Mr. Whiting comments, “…if you’re going to be in the REIT Index, you’ve got to be in net lease.” He also discusses build-to-suit developments and interest rates.

Ever wondered why so many REITs are based in Maryland? With Reven Housing REIT making the move to Maryland, the company’s chairman and CEO, Chad M. Carpenter comments that “Maryland’s more comprehensive laws governing REITs, Maryland’s policies with respect to REITs and the established body of relevant case law are more conducive to the operations of a REIT.” Maryland has a long history of welcoming REITs and its laws offer relatively wide protection for them against liability and hostile takeovers.