Good News, Bad News of Increased Real Estate Capital Flows

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Uploaded by on Jul 13, 2011

http://www.reit.com Paul Adornato, managing director with BMO Capital Markets, sat down with REIT.com at REITWeek 2011: NAREIT's Investor Forum to discuss the state of the real estate investment marketplace and how REITs are positioned for what lies ahead.

He said capital flows are a main area he is watching in the second half of 2011, especially with respect to the transaction market.

"With the recovery of the capital markets over the last several months, we've seen a great influx of capital that is looking for real estate," he said. "So, the good news for REITs is that they are able to dispose of properties that they have wanted to sell. The bad news is that on the flip side acquisitions are getting a bit too pricey."

Looking specifically at the retail sector, Adornato said he is seeing a choppy recovery where there remains a great deal of distress in suburban markets where retailers still have the upper hand. In dense urban areas, Adornato said the balance of power is shifting to those retail owners who have available sites to offer national retailers who do not have a presence in that market.

Despite the strong run REIT share prices have been on in recent years, Adornato said investors still have reason to be optimistic about results going forward. However, he said investors will likely have to be more selective in their investment choices to find the best opportunities for value going forward.

"We would probably take some profits on the multifamily side and invest instead in those companies that exposure to urban retail," he said. "We are also keeping an eye on industrial REITs. As the U.S. economy recovers, we think that will be a nice place for investors to put their money."

By Matt Bechard

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  • Great Video. Thanks!

    KnipeRealty 8 months ago

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