From a small northwestern observatory…

Finance and economics generally focused on real estate

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REIT Valuations — Looking Forward

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We’re still picking thru the immense amount of information that came out of REIT week back in June.  Paul Whyte, a managing director at Credit Suisse in charge of their investment banking sector, is looking for “continued growth in valuations and operating income in the commercial real estate industry during the second half of 2012,: according to an article posted by writer Matt Bechard last week.

Whyte says investors will continue the “flight to quality” in terms targeting trophy assets, noting that “In uncertain times, capital tends to go where they see long-term opportunity.” Whyte singled out two sectors, retail and data centers, for particular attention.  In the retail arena, investors appear to be looking for higher-quality class-A mall properties rather than suburban investments.  He suggested that data centers are “intriguing,” and that with continued movement to cloud computing and social media, “there’s just enormous demand there.”

Reflecting our own sentiments here at Greenfield, Whyte has deep concerns about property investments in the Eurozone.  “I think that what Europe lacks is a comprehensive, long-range plan for fiscal unity,” Whyte said. “Without it, we’re just really putting Band-Aids on the patient.”  He also noted, “From a headline perspective, Europe is influencing the markets more so than I think anybody had ever imagined,” he said.

As for the U.S., he concurs that we are in a recovery mode, and projects investment  interest in energy, health care and technology sectors.

REITWeek was held June 12 – 14 at the New York Hilton.  It is the annual investor forum sponsored by the National Association of Real Estate Investment Trusts.


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