Foreign investors in U.S. real estate are seeking to preserve capital rather than maximize returns, and that is lowering cap rates, says CBRE National Partners' Senior Vice President Michael Kendall. "In many cases, they simply want to get money out of their home currencies and into dollars as a safe haven," he says.
Corporate Office Properties Trust is eyeing $350 million in proceeds from its recent pricing of unsecured senior notes. The REIT has had a busy year in the capital markets, according to Steve Riffee, executive vice president and chief financial officer.
Small businesses have much to worry about with the "fiscal cliff," writes Kris Roglieri, president and founder of Prime Commercial Lending and Commercial Capital Training Group. Increased taxes on higher-income individuals will affect small businesses that declare profit on the owner's personal tax return. Lower small-business expense limits also will have a negative effect.
Moody's Investors Service's outlook on U.S. REITs is stable. The rating agency cited REIT portfolios' high occupancy rates and their outperformance in most markets. "The REITs continue to successfully navigate through difficult capital market conditions," said Philip Kibel, a Moody's senior vice president.
REITs have been putting aside money to buy the anticipated wave of distressed hotels going into foreclosure this year, said Dan Daniele, senior vice president of acquisition at Corporex, a real estate development and investment firm. Corporex is raising capital for a fund to buy bargain-priced foreclosed hotels on its behalf, he said. "We believe there is an opportunity to buy distressed assets," he said. "The momentum is building. It's like a snowball going downhill."