NEW YORK CITY-Bob White, founder and president of Real Capital Analytics, opened the Urban Land Institute’s “Real Estate Finance and Investment 2011” conference yesterday with a broad-ranging overview of capital market trends.
“It is a very complex market base right now,” White told attendees. “There are certain sectors that are performing incredibly well and certain sectors that have been left largely behind in any type of rebound whatsoever.”
Sluggish, White said, are the suburban office, retail and industrial sectors. He said that they’ve yet to “catch on fire,” and showed only pockets of progress thus far.
Among the sectors performing well right now were, not surprisingly, multifamily, seniors housing and hotels. White referenced the recent large number of hotel REIT IPOs. “Hotel numbers are triple year over year and that continues, mainly for full service hotels,” he said. Traded REITs in general, have tremendous access to both equity and unsecured debt, White said. He predicts that they’ll be big buyers moving forward.
“It’s been a great advantage to them,” he said about that access to debt and equity. “They will be one of, it not the biggest buyer this year. The non-traded REITs have also been significant. They’re out raising a different pocket of capital from individual investors looking for secure dividend yields,” White said. “The other sector is seniors housing. It’s truly amazing what is going on there.” RCA has tracked more transactions in seniors housing this year, White said, than they have in the office sector.
One striking point that came up, as far as the capital markets are concerned, is the tremendous appetite for yields. “We have a marketplace that is starved for yields,” White said. “Investors of all sorts looking for yields.” This search for yields coincides with the reemergence of CMBS–a bright spot–which White also referenced in his talk.
“Very rapidly, CMBS has become material again in the marketplace,” he said. “And that is a fantastic sign of progress and a big step that is necessary for the market to recover.”