REIT Growth Phase to Take Root in 2012

http://www.reit.com Keven Lindemann, director of the real estate group with SNL Financial, said the increased attendance at this year's REITWeek 2011: NAREIT's Investor Forum indicated an increased optimism in the real estate investment market.

"You are seeing a number of new faces as well," Lindemann said. "A number of smaller buy-side shops are sending one or two people. These are shops that don't typically send people to a REIT conference."

A common theme in the industry right now is the concept of moving from recession to recovery to growth. Lindemann said it is too early to label the current environment a full-on "growth phase," but it is getting closer.

"I think everybody is looking to see some more positive macro-economic signs. I think people want to see sustained job growth and the positive impact that will have across all of the property sectors," he said. "It doesn't feel like we are in growth mode yet, but it doesn't feel like we are too far off. If I had to guess, we will see more positive signs in the second half of the year and that will take hold next year."

Lindemann said the investment community has shown its faith in the continued recovery and eventual growth given the increase in REIT share prices.

One surprise in the market so far this year, Lindemann said, has been the relative lack of initial public offerings in the REIT space. He said the expectation was that we would see a larger number of companies entering the public space.

"It will be interesting to see whether IPO activity picks up in the second half," he said.

Continuing to look at the second half, Lindemann said companies need to "catch up" to their valuations in some instances.

"We have seen significant multiple expansion in the REIT space. We haven't really seen the earnings growth that I think the market would like to see," Lindemann said. "That is all connected back to seeing some better broad economic indicators."

By Matt Bechard

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