CBRE CEO Likes What He Sees in Mall REITs
07/17/2014 | by Allen Kenney

T. Ritson Ferguson, CEO and CIO of CBRE Clarion Securities, joined REIT.com for a video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.

Ferguson noted that, across the board, REITs are performing well in 2014. He singled out the mall sector as the biggest surprise.

“The mall sector, especially the A-quality malls, is very strong,” Ferguson said. “We like those companies—their ability to generate cash flow growth is quite strong.”

Despite the concerns that have surfaced regarding the threat of e-commerce to mall companies, “the sentiment hasn’t overwhelmed the fundamental story of these stocks,” according to Ferguson. Ferguson said he was “heartened” by the development.

In terms of underappreciated categories, Ferguson said hotel REITs are being underestimated.

“There’s certainly plenty of concern about the direction of the economy, but it feels like it’s up. It’s more a question of how much and how fast, as opposed to whether it’s going to improve,” he commented. “I think the hotel sector will benefit most from that.”

Although conditions are favorable for lodging REITs, Ferguson noted that the stocks are trading at reasonable prices.

In contrast, Ferguson expressed concerns over the state of health care and net lease REITs.

Looking abroad, Ferguson pointed out that the global market for listed real estate has grown significantly, creating “lots of interesting stories.” Ferguson tabbed the European market as one where he sees prospects for lucrative returns. Listed companies are gaining visibility in Europe, according to Ferguson.

“I think that will ultimately have some good implications, not only in how the existing stocks perform, but I think we’re going to see more companies come onto the landscape,” he said. “That’s always exciting.”

Additionally, as China’s economic growth slows, it has implications for broader global economy, according to Ferguson.