Experts Paint Complex Global Picture at REIT Week Finale
- Jun 06, 2008
The worldwide REIT movement offers vast potential, but cultural gaps continue to present hurdles to true globalization of the industry. That was the perspective offered by an expert panel in New York City this afternoon at the concluding event at the National Association of Real Estate Investment Trust’s annual REIT Week forum for investors. After a difficult period marked by declining stock values, the outlook for REITs is brightening, several panelists told an audience of several hundred at the Waldorf-Astoria hotel. “We still see some very positive light at the end of the tunnel,” noted Jack Foster, managing director & head of global real estate for Franklin Templeton Investments. “Real estate may not only be the place to be (for the future), but the place to hide right now.” The cross-border flows of capital from REITs and other sources will likely continue to gain momentum. In the years to come, markets outside the United States are projected to generate some two-thirds of the revenue for Merrill Lynch & Co.’s real estate investment banking operations, explained Jeffrey Horowitz, the real estate unit’s global head. “We’ll see more regionalization, more REITs, and more uniformity in REIT legislation throughout the European region,” predicted Nancy Holland, chief investment officer of global securities for Fortis Investment. She expressed hope that India and China will develop REIT industries in the near future. Since real estate is fundamentally a local business, however, expanding outside the home country is no cinch. “It really isn’t that simple to suddenly become a global player,” said James Rehlaender, managing director for European Investors Inc. Other panelists noted that transparency is still a challenge. In response to a question from the panel’s moderator, Neuberger Berman L.L.C. managing director Steven Brown, panelists acknowledged that transparency is improving dramatically in major markets like Japan. Yet in many countries, disclosure has a long way to go. “We still have a lot of companies that won’t even tell you what buildings are in the portfolio,” noted Rehlaender. Information can be particularly scarce in emerging markets, Holland pointed out: “You’ve got to have people who know those markets,” she said. But Rehlaender also reported signs of improvement. Citing Japan as an example, he said, “In the last three years it’s better than it was five years ago, and we expect that to continue.” At least one panelist suggested that the transparency issue stems partly from perception. Third-party asset appraisals are widespread outside the United States, but are not standard practice here, noted Foster.