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REITWorld 2015 - Panel Sees Encouraging Real Estate Fundamentals

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Real estate fundamentals continue to look encouraging across most property types, according to participants on a panel at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT.

Ed Fritsch, president and CEO of Highwoods Properties, Inc. (NYSE: HIW) and NAREIT’s 2016 Chair, moderated the panel. Mike Kirby, chairman and director of research at Green Street Advisors, argued that 2015 “might be the best year ever in the last 25 years for fundamentals on a net operating income (NOI) basis.” If the current low, but positive, growth environment continues for the next five years, he said, “we should be happy. REITs will do just fine.”


As for possible disruptors to the current outlook, panelists pointed to threats of terrorism and a weakening global economy.

“Our biggest risk is getting dragged down by everyone else,” Kirby said. “We’re the beacon right now. Our real estate market couldn’t be healthier, while growth in most other places is faltering.”


Kirby described the multifamily sector and top-tier malls as "buy-and-hold" investments for the long term. He also highlighted the continued growth of the self-storage sector, adding that there appears to be no slowdown on the horizon: “As a sector, it just keeps on giving.”


As for public and private market valuations, Kirby observed that Equity REITs are “pretty fairly valued.”  Kirby said he recommends that investors increase their REIT allocations since most are “dramatically under-allocated” to REITs. According to Kirby, “if you’re not at a 10 percent to 15 percent REIT allocation, you’re probably light.”


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