LOS ANGELES—Throughout a current session on the nationwide GlobeSt. Internet Lease fall convention, web lease REIT executives mentioned new alternatives to diversify portfolios and examined market shifts which are having an impression on operations.
For panelist Michael McKenna, vice chairman of leasing at Rexford Industrial, the agency’s leverage continues to be low. The present problem for the economic REIT primarily in Southern California is availability. “We’re nonetheless seeing demand for product with charges nonetheless going up,” he stated. “We’re 99% occupied and what’s left over is tough.”
Whereas McKenna says issues nonetheless haven’t trickled down but, he’s curious to see if these buildings which are coming on-line subsequent yr will maintain to what they suppose they’ll obtain. “I’ve seen some current properties within the South Bay [Los Angeles] which have delivered to market and people house owners are holding agency on their charge.”
Rexford will proceed to give attention to low leverage into 2023. “Being fast and with the ability to do this inexpensively is our plan,” he stated.
What’s attention-grabbing to Joshua Zhang, director of investments at 4 Corners, is the discrepancy between private and non-private valuations. “That’s what I’m keeping track of going into 2023,” he stated. “There may be nonetheless a discrepancy or a lag so we would see some convergence in 2023 and it will likely be attention-grabbing to look at how that shapes out.”
Within the close to time period, Alex Thomas, VP of acquisitions at Spirit Realty Capital, shouldn’t be anticipating issues to get significantly better. “We’re a little bit bit in uncharted territory,” he stated. “On the acquisition aspect, we’ll keep affected person however are feeling the impression of price capital rising. It is going to be attention-grabbing to see the way it performs out.” He added that he expects some attention-grabbing alternatives forward, however says that Spirit Realty Capital can be selective. “Our portfolio is able to deal with a recession. The portfolio metrics look secure.”
On the subject of acquisitions, Zhang defined that his agency has to remind themselves that regardless that they’re acquisition of us, REITs don’t have to purchase. “We will nonetheless acquire hire and challenge dividends and we will get inventive by promoting good properties and shopping for again shares, particularly if there’s a discrepancy between private and non-private market valuations,” he stated. “You probably have pre-raised capital at cheap charges, you’ll be wonderful. When you over-extended your self and have giant credit score points as a REIT, you’ll get damage.”
He added that “This may be an extended winter or drought … however it’s about recalibrating and transferring ahead.”
