Investment Real Estate

www.reit.com REITs have entered a new property acquisition cycle, and the preferred securities market is an attractive source of financing, especially for new and smaller REITs that may not yet have access to unsecured debt, according to Bill Scapell, director of fixed income with Cohen & Steers. In a video interview with REIT.com, Scapell outlines the advantages of REIT preferreds, as well as ways to mitigate some of the potential risks they may pose for investors. Scapell says that while preferreds are more expensive than bonds, they’re less expensive than common equity—and perpetual preferreds enhance issuers’ balance sheet flexibility, as we saw in the recent credit crisis. As unsecured and covenant-free obligations, preferreds may also help companies achieve other balance sheet goals, including higher credit ratings. Additionally, potential increases in interest rates could motivate issuers to use preferreds as sources of long-term financing. Refinancing will also drive new issues, Scapell says. With interest rates now low and credit spreads having tightened, many issuers may call their higher-coupon securities and replace them with lower-coupon issues, he says. Preferreds’ high, frequent and stable income is their greatest appeal for most investors. In a yield-starved environment, REIT preferreds can provide income rates of 7.5 percent or so for a diversified portfolio, according to Scapell. Scapell points out that while interest-rate risk is an issue, right now …
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The panel of experts shares its insights into the French real estate market (economy, regulation, taxes) and presents the main scenarios for investments in 2011. The panelists benchmark their respective strategies while giving further explanations about their choice to invest (or not invest) in France and the asset classes they prefer Moderator Catherine Sabbah, Journalist, Les Echos (France) Speakers Philippe Couturier, Director General, Constructa (France) Dominique Dudan, President, Union Investment Real Estate France (France) Xavier Mouette, Directeur des Acquisitions / Head of Acquisitions, Allianz Real Estate France (France) Prof. Yuichiro Kawaguchi, Professor, Waseda University (Japan)
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