REITs Aiding Recovery, Assessing Damage in Puerto Rico
More than one week after Hurricane Maria swept across the island, Puerto Rico remains without electricity. Meanwhile, roads are impassable due to extensive flooding, and essential supplies are running low.
For REITs that operate in the storm-devastated territory, the process of contacting employees, providing assistance and assessing damage is only just starting.
Shopping center REIT DDR Corp. (NYSE: DDR) has 12 properties in Puerto Rico. DDR CEO David Lukes said the company continues to work to provide basic supplies to its local team and their families. DDR has also made steady progress assessing damage and is preparing repair plans.
“We expect full recovery to span a significant period of time given damage to Puerto Rico’s critical infrastructure and the current difficulty procuring building materials and making necessary repairs,” Lukes said.
Plaza Palma Real, DDR’s property on the southeastern portion of the island, sustained major damage, the company said. While the company’s remaining 11 assets sustained less significant damage, DDR noted that it remains unclear when re-openings could occur.
American Tower Corp. (NYSE: AMT) reported that of the sites it has been able to gain access to and inspect, it appears that the structural integrity of the towers has held. However, a substantial amount of the carrier customer equipment on the towers and at the sites is badly damaged. This damage to carrier equipment and the loss of electrical power has resulted in very few cell sites being operational, the company said.
American Tower has resources on the ground now who are helping with recovery efforts, performing full site audits on its 118 towers and identifying priority projects. The company is working with the Federal Communications Commission, Federal Emergency Management Agency and the Department of Homeland Security on a coordinated response.
Retail REIT Kimco Realty Corp. (NYSE: KIM) is busy ensuring its employees are safe and providing them with necessary assistance, according to Jennifer Maisch, director of corporate communications. As for damage assessment, infrastructure challenges are preventing a complete review of its seven shopping centers at this time, she said.
Maisch said Kimco is encouraging employees throughout the company to donate to the Red Cross through the International Council of Shopping Center’s (ICSC) portal. Kimco is matching employee donations up to a total of $50,000. The ICSC Foundation, the charitable arm of ICSC, said it will match the first $500,000 contributed by ICSC members to the American Red Cross’ hurricane relief efforts.
Mall REIT Taubman Centers, Inc. (NYSE: TCO) had a seven-person security team on site at its only property in Puerto Rico, The Mall of San Juan, during the hurricane. That lessened the impact to certain areas of the center, the company said.
Taubman said it continues to work with tenants to fully understand the extent of the damage.
“With nearly all of the island’s power out and Puerto Rico’s residents highly disrupted, it is very hard to tell when we will have the full resources and manpower needed to complete the task,” said Ryan Hurren, director of investor relations at Taubman.
Meanwhile, tower REIT Crown Castle International Corp. (NYSE: CCI) has 262 cell towers located in Puerto Rico and is still in the process of conducting inspections.
“So far, we have found that our towers maintained their structural integrity and continue to provide the infrastructure required to host our wireless carrier customers,” Crown Castle said.
Crown Castle noted that it is clearing debris so that wireless carriers can gain access to their equipment to make repairs as needed and restore network service for customers. The company is also working to bring in additional resources, equipment, water and fuel to help support the needs of the community.
Business storage REIT Iron Mountain Inc. (NYSE: IRM) said its facilities will be closed and all service in Puerto Rico will be suspended until further notice.
“Widespread destruction caused by Hurricane Maria is hampering our efforts to quickly assess our facilities as there are limited options for communicating with our employees and recovery partners,” Iron Mountain said. The REIT said it is preparing to secure its facilities and begin remediation as soon as possible.
Published at Fri, 29 Sep 2017 17:46:38 +0000
When it held its initial public offering in 2014, Fibra Mty, S. C.
Currently, about 21 percent of Fibra Mty’s tenants are in the technology sector, followed by 19 percent in the automobile logistics industry and 13 percent in both the services and manufacturing sectors. To maintain the portfolio’s diversity, Fibra Mty has set a 25 percent cap on any one tenant sector.
Taking a broader view of the Mexican real estate market, Avalos believes fibras have become a key player in benchmarking the price of any quality asset. In addition, he believes developers have benefitted from access to specialized capital.
While large Canadian asset managers, pension funds and pension fund companies have been roaming around the world buying real estate and infrastructure assets, Canadian REITs have also been quietly moving beyond Canadian borders to grow their portfolios.
Additionally, Meaney points out that profit margins on Recall’s operations have grown since the acquisition. Prior to the deal, Recall was attempting to compete globally, but doing so at roughly a quarter of the size of Iron Mountain, according to Meaney.
Iron Mountain’s expansion in data centers has proceeded deliberately through a mix of development projects and M&A. “We’re very disciplined in terms of our return criteria” for data center assets, Meaney says. 
Aging may slow people down, but rising numbers of seniors and growing longevity are revving up demand for medical services and health care real estate.
While Herzog acknowledges the headwinds from new supply on senior housing, he says construction deliveries should normalize by mid-2018. “Additionally, baby boomers begin turning 75 in 2020 and the over-75 population will grow by almost 50 percent over the next decade,” he says.
Hospitals
In the current market environment, investing in health care REITs can be considered a flight to safety for many investors; a safe space anticipated to become more so as Americans age.
Scholars of history have long tried to answer a simple question: Why do some nations thrive, while so many others fail?
But extractive institutions are not stable, either. They will generate conflict, and those who are losing out from such institutions will often articulate their demands for institutional change. This creates a possible pathway for inclusive institutions.
When it comes to the growth of REITs and publicly traded real estate companies in the Asia Pacific region, it’s all about the middle class.
This growth feeds the middle-class expansion, shifting consumer demand, says Shaowei Toh, a director of research and strategy for real estate and private markets in UBS Asset Management’s Asia Pacific region. “They used to need basic housing, now they want private housing,” he says. “History has shown us [that] when the middle class starts to expand strongly, there is a greater demand for fast-moving consumer goods.”
“That is a prohibitive cost,” Bairathi says. One possibility is that the government waive the stamp duty if a property is held for a period of years. Alternatively, states could issue a one-time waiver of transfers of assets to REITs.
“It’s a very rational and quite scientific public-policy process,” Verwer says. “The idea is to test out different models in different parts of the country for different asset types and learn from those processes before they start writing any black-letter law. The expectation is that this process will continue for a few more years.”
That said, given Asia’s growing middle class, the demand for more real estate is not far behind. That will further the need for more tax-efficient and transparent REIT regimes.