Stephan Richford, U.S. Head of Real Estate at BMO Capital Markets, participated in a video interview in conjunction with Nareit’s REITworld: 2021 Annual Conference.
Richford characterized current capital market sentiment at it relates to the REIT industry as “incredibly strong.” Many property sectors are trading at net asset value (NAV) premiums or very strong multiples, while REITs have strong access to capital, he said. Richford added that the bigger issue for REITs right now is use of proceeds, given that there’s “pretty heavy competition” from levered buyers.
Overall, “when you look at the metrics in aggregate, REIT balance sheets have never had cheaper debt and never had longer-dated debt,” Richford said.
During the video Richford also discussed whether interest rate uncertainty caused him to alter any forecasts or strategy for the near term. He also commented on whether REIT valuations have stabilized, and which property sectors are seeing the most fluctuation at this point. “Office, lodging, and malls need to find their footing a little bit,” he said. Richford added that “there are still a few quarters to figure out where REIT valuations are going to stabilize.”