From a small northwestern observatory…

REITWorld is the principal annual meeting of the National Association of Real Estate Investment Trusts (NAREIT), held this past week in Atlanta.  I had the privilege of representing Greenfield, meeting with many of the top leaders in the securitized real estate field. The tone was generally upbeat, not surprising given the great run that REITs have enjoyed the past few years.

The gathering was a mix of very specific information on individual REITs, provided in small group briefings by the leaders of those REITs, along with several large group meetings with briefings on the industry as a whole.  As expected, many of the service providers to the REIT industry were there, such as the research firm SNL Financial, with whom I had several great meetings.

The biggest concern in the meeting was matching past performance.  REIT investors have enjoyed unprecedented gains since the trough of the recession, and even though most sectors of the market look stable and solid going forward, no one believes that returns for the next few years will equal those of the past few years.

Leading economists presented two of the five featured programs — Jeffrey Rosensweig, Director of the Global Perspectives Program at Emory U., and Robert Zoellick, currently a Senior Fellow at Harvard’s Kennedy School and former President of the World Bank.  In addition, the Board of Governors dinner speaker was former Secretary of State Madeleine Albright.  The focus and attention of REIT leaders is clearly on the global scene.

In other news, the death notices for traditional retail may be premature.  As noted by Sandeep Mathrani, CEO of General Growth Properties,  malls today can really be divided between “A” and “B” properties. The “A” properties are in high demand by in-line tenants, who have much stronger balance sheets than in the past.  Right now, occupancies in the high-90% range with strong rent growth is the norm for “A” retail properties.  As such, this sector is looking for continued strong growth in the near term.

Europe is projected to be an interesting market in the intermediate term for REITs looking for global expansion and choice properties.  About 80% of the commercial real estate debt in Europe is scheduled to mature in the next 5 years, and many if not most of the debt holders are in no position to renew or “roll” that debt.  As such, cash-rich investors may have some cherry picking opportunities soon.

Finally, the closing session speaker was Mark Halperin, Managing Editor of Bloomberg Politics.  He shared intimate insights on the Washington political scene for the next few years, with a particular emphasis on the presidential campaign (which, if you didn’t notice, started last Wednesday morning).