Jeffrey Horowitz, global head of real estate, gaming & lodging investment banking for BofA Securities, received Nareit’s 2021 Industry Achievement Award, in recognition of his efforts to heighten awareness and understanding of the value of REITs and publicly traded real estate.
Horowitz’s role in helping REITs successfully emerge from the Great Recession of 2008 by advising the industry to recapitalize with public equity in spring 2009 was highlighted when the award was presented at Nareit’s REITworld: 2021 Annual Conference. Horowitz, who joined BofA Securities in 2005, currently serves as BofA’s representative in Nareit’s Executive Board Associate Program.
What are the biggest lessons REITs can take away from the pandemic?
The pandemic has been both a time of reflection and action for all of our clients, and there are many lessons learned. Regardless of whether a sector was positively or negatively impacted, it was clear that balance sheets need to be flexible with few near-term maturities, such that clients can either take advantage of adversity or protect themself from disaster. It was also clear that all companies must have the proper technology and systems in place to manage their business, communicate with clients and employees, while in or out of the office.
Which property sector do you anticipate seeing the biggest disruption in the years ahead?
It will take the longest to understand the impact of the office sector, given the length of existing leases. Companies are still figuring out what flexibility is appropriate to provide their employees to work from home, how best to lay out their physical space, and how to think about the location of their employees given flexibility concerns, labor shortages, and tax policy. Realistically, my sense is that it could be anywhere from a couple to a few years before there’s a handle on the answer to these questions.
What are you watching most closely in the economy right now?
There are a meaningful number of economic and societal factors that we’re watching. They include the status of the pandemic, inflation, interest rates, potential Federal Reserve hikes, tax policy, GDP growth, labor shortages, future midterm elections, and more. The results of these and other factors will impact money flows and investor reactions.
How might the REIT industry evolve going forward?
The REIT sector obviously had a particularly strong 2021, with asset valuations improving materially in many sectors. Many companies will benefit from inflation and continued low interest rates. They’ll also benefit from a continued strong bid for assets. Consolidation will continue to be a theme as I believe M&A activity, which has been robust, will continue to be so. In some cases, the number of companies remaining in certain sectors will shrink to a very small group of large companies, which of course has implications for investors.