Green Street Advisors

 

 

Institutional Investor: Malls Aren't Dead- and Other Facts REIT Investors Should Know

According to Institutional Investor:

While some in the investment community have soured on real estate investment trusts-turned off by the Federal Reserve's interest - rate hikes and the likelihood that real estate is late in its growth cycle - others still see value in the sector.

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Trying to gauge cycles is tricky in any case. "You don't know exactly where we are in a cycle until the cycle is over for a year or so," says Cedrik Lachance, director of U.S. REIT research for Green Street Advisors, a real estate research firm in Newport Beach, California.

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Several analysts and money managers recommend apartments REITs in light of the declining homeownership rate and the trend toward urbanization. The homeownership rate stood at 63.6 percent in the first quarter, according to the Commerce Department, down from a peak of 69.2 percent in 2004. While increasing apartment supply has been a concern, that supply growth has started to decelerate, analysts say. "By 2019 there will be a lot less supply," says Green Street's Lachance.

Green Street is also attracted to manufactured-home (trailer-park) REITs. That's because, like apartments, these properties require low capital reinvestment and tend to provide strong long-term cash flow. And virtually no new supply is coming into the sector, Lachance says.

Read the full article from Institutional Investor here.