Green Street Advisors

 

 

GlobeSt: REITs Do More Building Than Buying

According to GlobeSt:  By and large, REITs have become net sellers as the current real estate cycle has matured.

...

However, in a report summing up Green Street Advisors’ impressions of this year’s edition of REITWeek, the annual conference in New York City sponsored each June by NAREIT, managing director Cedrik Lachance sees other factors mitigating the positive selling environment. “Four sectors sport an unfavorable cost of capital”—namely, apartment, lodging, shopping mall and office—“and the companies often have become net sellers, although many can’t seem to stop developing, thus greatly hurting the benefits they would get from shrinking their balance sheets even more,” writes Lachance.

...

In the office sector, for example, Lachance notes that development-oriented REITs continue to pursue new projects, “some more aggressively than others.” Boston Properties, for one, is taking “a more conservative posture on pre-leasing requirements,” while Mack-Cali Realty Corp. remains bullish on the multifamily starts it’s expecting to commence through its Roseland division over the next few years. “Unfortunately, most of the REITs involved in development trade at sizable discounts to GAV, suggesting their cost of capital is not conducive to growing their portfolio, especially not in this risky business.”

...

To view the full article from GlobeSt, click here.