REIT stocks bear out the assessment of Jeffrey Barclay, managing director of ING Clarion Partners: "It looks like it will be very serious for a long time." Barclay and other institutional investment experts brought together for an hour-long GlobeSt.com webinar saw no quick and easy path through the market challenges and pain that lie ahead. "There really is no shortcut," said Charles Leitner, global head of RREEF.
However, the pathway through those challenges will eventually lead to somewhere, the panelists agreed. Look for deal velocity to gradually increase along with the pressure to transact, albeit at lower pricing than the industry saw two or three years ago. "We're going to get to a value proposition fairly soon," predicted Barclay. "Why? Because we have to."
Titled "Capital Markets Symposium: More Pain, Little Gain," the Jan. 12 webcast was moderated by Steve Pumper, executive managing director of investment services at Transwestern, and Michael Desiato, vice president of Incisive Media's real estate group. It was presented by Transwestern and Real Estate Forum, sister organization to GlobeSt.com.
 Barclay |
And fundamentals may get worse before they start to improve. With some forecasts predicting that unemployment nationwide could exceed 9%, Barclay warned that funds and other property owners must be prepared for NOI to go down across the board.
Even so, Blackrock managing director Peter McNally said that funds that haven't boosted their liquidity by selling assets—regardless of pricing declines—may be in a bad situation later on. "Come next fall, if you haven't sold anything, you're going to have some explaining to do," he said.
Among the hopeful signs for the coming year, Garbutt said everyone he's talked to is looking at "a longer-term horizon" rather than short-term payoffs. That longer view may be especially apt in a year which McNally predicted will test his client's patience. Panelists concurred that another reason for optimism is the incoming Obama administration and the president-elect's pick to lead the Treasury Department, Timothy Geithner. That's especially true in the context of the global market, Leitner said. "The world is betting on the US succeeding. The US has to realize that partnering with the world is part of succeeding."
Listen to a replay of the Jan. 12 event, available over the next three weeks, here.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
