Top 10 Trends from REIT Café

Each quarter, REIT Cafe’s editor notes top trends and themes in the real estate investment trust space. Read a summary of the editor’s strategic trends and company picks for the first quarter of 2011.

January 20, 2011

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Each quarter, REIT Cafe‘s editor notes top trends and themes in the real estate investment trust space. The following summarizes the editor’s strategic trends and company picks of real estate investment trusts (REITs) for the first quarter of 2011:

Infrastructure REITs: Why should infrastructure investments be solely the province of institutional investors? REITs to watch: Sharyland Utilities.
24-hour gateway markets: No surprises here; we’ve been trumpeting this strategy and cities (Washington, New York, San Francisco, Boston, and Seattle) in Emerging Trends for years. REITs to watch: Vornado Realty Trust; SL Green Realty Trust; Boston Properties; and AvalonBay.
Student housing: Niche property type combined with strong demographic play. REITs to watch: American Campus Communities; Campus Crest Communities; and Education Realty Trust.
Institutional investors: Yield and performance make a compelling thesis for institutional investors to increase their allocations to the REIT space. New to the game: Iowa Public Employees; New Mexico Educational; New York City Teachers; New York City Fire; and the State of Florida.
Increasing leverage: Now’s the time to lock-in leverage; rates can’t get any lower. REITs to watch: Home Properties; AvalonBay Communities; and Glimcher Realty Trust.
Mortgage REITs: No one knows if lenders will actually start selling distressed commercial loans, but if they do—REITs to watch: Colony Financial Capital and Invesco Mortgage TRUST.
Social media: REITs are hip to new marketing channels and social networking platforms as a way of expanding their on-line footprint. REITs to watch: Extra Space Storage; UDR; Weingarten Realty Trust; Developers Diversified Realty; and ProLogis.
Directional REITs: Non-traded REITs with specialized, directional investment outcomes such as growth, global or opportunistic, etc. REITs to watch: CNL Real Estate group and Grubb & Ellis equity Advisors.
Regulation and reform: The uncertainty of uncertainties—Dodd Frank, FASB, etc. REITs to watch: Everyone!
Era of less: We headlined this in Emerging Trends in Real Estate 2011. Lower transaction volume, lower returns, lower leverage, etc. will effect all REITs.

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Stephen Blank

Stephen R. Blank joined ULI in December 1998 as Senior Fellow, Finance. His primary responsibilities include: expanding ULI’s real estate capital markets information and education programs; authoring real estate capital market commentary; participating as a principal researcher and adviser for the Emerging Trends in Real Estate series of publications; organizing and participating in real estate capital markets programs at ULI events worldwide; and participating in industry meetings, seminars, and conferences. Prior to joining ULI, Blank served from December 1993 to November 1998 as Managing Director, Real Estate Investment Banking of Oppenheimer & Co., Inc. His responsibilities included: structuring, underwriting, and executing corporate financings including initial public offerings of common and preferred shares, unsecured debentures, and convertible bonds; property acquisitions, dispositions, and financing; and financial advisory services including mergers and acquisitions, corporate restructurings, and recapitalizations.