REIT Industry Eyeing Shifts in Capital, Regulation

Category: Commercial Real Estate

Real estate investment trusts (REITs) say changes are on the horizon in capital markets and government regulation, which is driving risk sensitivity across the board in 2017, reports World Property Journal. Many of the top REIT firms agree on their own biggest risks in published filings, and a new report confirms challenges facing the industry are shifting.

“Real possibility” of a slowdown

“After enjoying several years of growth following the economic crisis, investors are beginning to take a more cautious approach,” Stuart Eisenberg, partner and national leader of global accounting firm BDO’s real estate and construction division, told the news outlet. BDO recently released its 2017 Risk Factor Report for REITs. “A potential slowdown in the market, combined with concerns of rising interest rates, a lack of continued access to capital, and disruptions in several REIT sectors, has added to the uncertainty. For REITs navigating the current economic environment, there is a real possibility this confluence of factors may result in slower growth,” he added.

Trump mentioned by name in risk report, filings

According to the article, every one of the nation’s 100 largest REITs listed two top risk factors in their most recent SEC 10-K filings. All were worried about “general economic conditions,” including disruptions to financial markets, as well as “access to capital, financing, and liquidity.” While the former risk factor has remained a top concern of REITs for the last three years, the latter moved up the list. Other highly cited concerns included regulations, geopolitical events, competition, tax issues, liabilities and indebtedness.

Among issues highlighted in BDO’s report were recent shifts in the U.S. political landscape. Forty-four percent of firms reportedly cited concerns related to the new administration in their 10-K filings, and more than one in four mentioned President Trump by name. In all, the President’s name reportedly came up in the documents a total of 59 times.

 

Posted on: Wednesday, July 12, 2017