Real Estate Investment Trusts

Broadstone Sees Expansion in Net Lease, Single-Family Rental Platforms

Chris Czarnecki, CEO of Broadstone Real Estate, LLC, joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Czarnecki was promoted to CEO of the private REIT in February. He noted that some of his major goals in the new role include maintaining consistency with investors and growing the employee base to ensure the company has enough expertise to handle the growth of its net lease and single-family rental home platforms.

Broadstone Net Lease became a public filer for the first time this spring, Czarnecki said, and has also undertaken some more complicated capital markets transactions.

Meanwhile, the single-family rental platform Broadtree Residential is growing quickly, Czarnecki noted, and increasing capital raising is important.

“We’re looking to be the low-cost, low-fee leader for the high net worth investor,” Czarnecki said.

Looking broadly at the single-family rental market, Czarnecki observed that consolidation is still happening rapidly.

“Portfolios are trading and we are looking to be a consolidator,” Czarnecki said.

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Published at Wed, 28 Jun 2017 12:42:31 +0000

STORE Capital Sees Broad Opportunities to Expand Tenant Base

Chris Volk, president and CEO of STORE Capital Corp.(NYSE: STOR), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

STORE is an acronym for single-tenant operational real estate, which is the company’s target market.

Volk emphasized that STORE’s number one goal is to create an investment-grade contract lease stream.

At the same time, Volk stressed that STORE places a premium on tenant diversity. He noted that 80 percent of STORE’s revenue comes from tenants that individually represent less than 1 percent of the portfolio.

STORE’s top tenant represents about 3 percent of the portfolio, Volk said. “When you compare that to our gross internal rate of growth, it’s about the same thing. That’s totally by design,” he added.

Volk also said he sees broad opportunities for growth.

“The opportunities for growth are really all over the place. The marketplace we are addressing is in the trillions of dollars,” Volk said.

STORE has a database of potential tenants that exceeds 10,000 companies, according to Volk. Fewer than 400 of those companies are current STORE tenants, and many companies in the database aren’t even aware of the potential services STORE can provide, he added.

“Our opportunity is not just to gain market share, but really to create demand,” Volk said.

STORE announced on June 26 that Berkshire Hathaway has invested $377 million in the company, representing 9.8 percent of total shares outstanding.

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Published at Tue, 27 Jun 2017 16:15:14 +0000

American Campus Communities Focused on Living-Learning Amenities

Bill Bayless, CEO of American Campus Communities(NYSE: ACC), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Three essential amenities for today’s student housing developments include technology capability, areas for group and individual study and related tasks, and health and wellness facilities, according to Bayless.

“You’re seeing an immersion of the academic experience coming together with the real estate to where it’s really creating these living-learning communities,” Bayless said.

Meanwhile, Bayless said he expects the company to be a net buyer this year.

He also said that the best growth opportunities for 2017 and into 2018 continue to be on the development side. American Campus Communities has $603 million of development projects to be delivered this fall. The company has also announced a $1.3 billion development pipeline through 2019.

“Development continues to be very accretive to value creation,” Bayless said.

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Published at Fri, 23 Jun 2017 17:16:51 +0000

Columbia Property Trust Still Sees Rent Growth Potential in Gateway Markets

Nelson Mills, president and CEO of Columbia Property Trust, joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Columbia sold $500 million of assets in the first half of the year, completing a three-year transition in which it disposed of $3.3 billion in assets, Mills said. While Columbia still has three properties in its portfolio that are not located in its core markets, there are no plans to sell them this year, he added.

Turning to Columbia’s main markets, Mills noted that growth in New York and San Francisco has slowed. However, “we still see plenty of runway there for rent growth.”

Washington, D.C., is a “tougher situation, but we really like the longer-term prospects there,” Mills said.

Although Columbia is not expecting growth in the broader office sector to be as strong as it has been in recent years, it remains stable, Mills observed.

“The office sector has traded off a bit relative to other sectors, so we have high expectations for 2017 and 2018,” Mills added.

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Published at Fri, 23 Jun 2017 17:11:10 +0000

Self-Storage Industry Growth Remains Above Historical Averages, National Storage CEO Says

Arlen Nordhagen, chairman, president and CEO of National Storage Affiliates Trust(NYSE: NSA), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Despite a slowdown in the pace of growth, Nordhagen pointed out that growth for the industry remains about 10 percent ahead of the historical average for revenue and same store net operating income (NOI) growth.

National Storage, meanwhile, is running about 50 percent ahead of historical averages, according to Nordhagen.

“We’re doing very well right now and we continue to see very strong demand,” Nordhagen said.

Nordhagen also said the company aims to grow its asset base between 7 percent and 15 percent this year, or $200 million to $500 million of additional assets.

“We think there’s a good chance we’ll hit the higher end,” Nordhagen said, although that will depend on the ability to complete third-party acquisitions or joint ventures.

Looking ahead, Nordhagen said the big question is whether the company can continue to perform above historical averages.

“We definitely see the trend coming down to be in those historical average numbers,” Nordhagen said.

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Published at Thu, 22 Jun 2017 19:28:56 +0000

Apple Hospitality REIT Exploring Transactions

Justin Knight, president and CEO of Apple Hospitality REIT, Inc.(NYSE: APLE), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

In light of revenue growth slowing, Knight said Apple Hospitality is focused on managing productivity and expenses to preserve cash flow and value for shareholders.

“We’re also exploring transactions that would be accretive for our shareholders,” Knight said.

Knight pointed out that the acquisition environment has been quiet for the past 12 to 24 months on a relative basis.

“We’re beginning to see renewed interest on the part of sellers and an increased number of buyers. I wouldn’t be surprised to see markets free up as we get later in the year,” he added.

Meanwhile, Knight said new supply continues to be seen in urban and gateway markets and beyond. Rising construction costs, however, are likely to put a brake on new supply growth rates in coming years, he noted.

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Published at Thu, 22 Jun 2017 14:39:29 +0000

DCT CEO Says Strong Demand Fostering Confidence in Industrial Sector

Phil Hawkins, president and CEO of DCT Industrial Trust(NYSE: DCT), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Hawkins offered his assessment of industrial real estate market fundamentals, including demand for space.

“Demand is really as positive as people read about,” he said. “As I think about the psychology within our own company, I think the confidence in demand is as high, or higher, than it was a year ago.”

The strong demand for space signals ongoing rent growth in the industrial sector, according to Hawkins. He added that the supply of space is “rational.”

Discussing the equilibrium between supply and demand for space, Hawkins said he focuses more on the demand side of the equation.

“To me, equilibrium where supply equals demand—where you have strong demand and low vacancy rates—is a very healthy environment to be in,” Hawkins said. “That’s one we expect to continue from what we can see as far out into the future as we can.”

Regarding the significance of DCT’s involvement in the communities in which it does business, Hawkins noted that the company “is changing the economic environment” where it develops properties. DCT adds value to these locations, “sites that have some problem that needs to be solved,” he said.

“Our organization is up to that challenge to figure out the solution,” he said, “and we’ve got the patience and the capital to do that.”

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Published at Thu, 22 Jun 2017 14:42:52 +0000

STAG Industrial CEO Expects Acquisition Pace to Accelerate

Ben Butcher, chairman, president and CEO of STAG Industrial, Inc. (NYSE: STAG), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Following the acquisition of 11 properties in the first quarter, Butcher said the pace of purchases is likely to accelerate.

Butcher attributed the uptick to an improving cost of capital and “pretty plentiful” opportunities to buy assets. Butcher said STAG has targeted the purchase of about 25 properties in the second quarter.

Butcher noted that while STAG is always interested in selling assets at a premium, the company is not an active seller at this time.

Meanwhile, Butcher attributed the 5 percent gain in funds from operations (FFO) in the first quarter to the company’s cost of capital and the accretive nature of the acquisitions made.

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Published at Thu, 22 Jun 2017 14:03:38 +0000

Veteran REIT Analyst Says Retail REITs Well Positioned for Long Term

Paul Adornato, managing director at BMO Capital Markets, joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Adornato commented on the outlook for retail REITs amid changing consumer habits.

“The retail REITs are in a very good position to respond because they have great relationships and a great understanding of the real estate and strong balance sheets,” Adornato said. “Over time, I think the retail REITs will be the winners as everything plays out,” he added.

Turning to the manufactured housing sector, Adornato said he expects supply-demand dynamics to remain positive in light of tighter mortgage lending standards, which have restricted credit to single-family borrowers.

Adornato, who is stepping away from sell-side REIT research at the end of the month, noted that REITs have become much more mainstream in terms of their size and sophistication during the last three decades. However, he added that there is still work to be done to make the REIT industry more shareholder-friendly.

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Published at Thu, 22 Jun 2017 14:24:01 +0000

Student Housing REIT EdR Adding Group Study Space into Designs

Randy Churchey, chairman and CEO of EdR (NYSE: EDR), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Regarding current trends in student housing, Churchey pointed out that students today are eager for more group study space within the dorms.

Churchey also contrasted the benefits of on-campus versus off-campus student housing. While EdR believes the best housing assets are located on-campus, Churchey said, he noted that on-campus development takes a considerable amount of time to coordinate with the university.

Meanwhile, Churchey said the market for student housing assets is particularly competitive, in part due to the presence of foreign buyers.

“We’re bidding on a lot of things, but from an acquisition standpoint, we’re not hitting the right bids,” Churchey said. He added that he doesn’t expect EdR to make acquisitions this year because prices are too high.

However, “our development pipeline is so large that we have embedded growth of almost 50 percent in 2017 and 2018 compared to 2016,” Churchey added.

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Published at Thu, 22 Jun 2017 14:16:59 +0000