Matthew Bechard

Something to Count On

Kyle Gustafson — Thu, 11 Nov 2021 14:46:34 +0000

Something to Count On Kyle Gustafson Nov. 11 2021

Matthew Bechard

Matthew Bechard is Nareit’s senior vice president, communications. He oversees all of Nareit's publication efforts including its award-winning magazine, REIT: Real Estate Investment Today, and Nareit's website.

Something to Count On

The REIT industry continues to persevere and remain true to its original mission: to allow all investors, notably small investors, the ability to access the benefits of income-producing real estate.

When I was writing this column one year ago, I tried to sum up what was an extremely challenging year for the industry and country as a whole.

“We all hope 2021 marks a return to an environment with less uncertainty, economic recovery for all people, better health for our communities, more inclusivity in our culture, and lasting positivity in our country. But no matter what challenges or opportunities lie ahead, the past six decades have shown that REITs will be there to help us adapt and enhance our daily lives.”

Replace “2021” with “2022” and the sentiment is as true today as it was a year ago.

While the pandemic still presents substantial challenges, the REIT industry continues to persevere and remain true to its original mission: to allow all investors, notably small investors, the ability to access the benefits of income-producing real estate. Over the years and many economic cycles, it has become a widely accepted view in the investment community that commercial real estate is a core asset class with unique investment attributes and return drivers, and an investment in REITs is an investment in real estate.

Recently, a series of research reports have further quantified the historical portfolio benefits of REIT allocations and the growing acceptance and investment in REITs as a core asset class.

Matthew Bechard, Editor in Chief

A survey conducted by Chatham Partners found that 83% of financial advisors invest their clients in REITs, and the most frequently referenced attribute they cite is “portfolio diversification.” The study showed that financial advisors understand the importance of meaningful REIT allocations—irrespective of the client’s age—from early career through retirement.

A separate analysis of the performance of real estate investments held by 200 of the largest U.S. pension funds shows that these financial advisors are likely offering sound advice. The study, by CEM Benchmarking, illustrated that REITs have continued to outperform unlisted real estate investments over a more than two-decade period, delivering higher returns for pension funds. However, despite their strong performance the study found that many pension funds may still be missing out on REIT benefits by under-allocating to them in their real estate strategy.

Yet another recent study sought to clarify how much of a portfolio should be allocated to REITs. The Morningstar Associates analysis shows that the inclusion of REITs in a portfolio increases the return for a given level of risk. Morningstar’s research found that the optimal portfolio allocation to REITs ranges between 4% and 13%, consistent with a number of studies that support a REIT portfolio allocation between 5% and 15%.

No matter what 2022 holds, there is one thing we can be certain of—that the REIT approach to real estate investment will continue its historical role as an important part of all investment portfolios.

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Down the Stretch They Come

Kyle Gustafson — Wed, 06 Oct 2021 18:55:00 +0000

Down the Stretch They Come Kyle Gustafson Oct. 6 2021

Matthew Bechard

mbechard@nareit.com

Down the Stretch They Come

Sponsoring and promoting key research along these lines is one more way Nareit shows how REITs are all about real estate working for you.

Nareit’s mission is to actively advocate for REIT-based real estate investment with policymakers and the global investment community. Consistent with that mission, institutional investors, such as defined benefit pensions and endowments, are one of Nareit’s primary audiences. These investors benefit from investing in REITs alongside the private real estate they have traditionally used in their real estate portfolios.

Nareit’s Research & Investor Outreach program develops and provides critical information and high-quality rigorous analysis targeted to these key investment cohorts to undergird the principal benefits of the REIT investment proposition.

A new comprehensive study sponsored by Nareit offers insight into if, historically, investors have been optimizing their real estate allocations by examining private equity real estate (PERE) fund returns relative to REITs.

The study, Private Equity Real Estate Fund Performance: A Comparison to Listed REITs and Open-end Core Funds, was recently published in the Journal of Portfolio Management and was authored by Tom Arnold, the former global head of real estate of the Abu Dhabi Investment Authority, David Ling, and Andrew Naranjo, well-known academics at the University of Florida who specialize in real estate finance. The authors spoke with REIT magazine about their findings and what it means going forward in this issue’s “Out Ahead” feature.

Matthew Bechard, Editor in Chief

The authors compared the performance of private equity funds to listed REITs using a “horse race” methodology to match the actual internal rates of return of individual private funds with U.S.-focused investments with the return of the FTSE EPRA/Nareit U.S. Net Total Return Index over each private fund’s investment horizon.

Compiling the data from 375 “horse races” between specific closed-end PERE funds and the REIT index over various periods between 2000 and 2014, the authors found that with no risk adjustments, REITs outpaced PERE funds in 53% of the races and outperformed the average private equity fund performance by 165 basis points. On a risk-adjusted basis, REITs outperformed by 68%, or 590 basis points.

The implications for institutional investors are clear. As co-author Naranjo says, the findings indicate that “institutional investors might benefit from reevaluating the way they structure their real estate allocations.” This analysis is also important for retail investors who can use REITs for real estate’s portfolio diversification benefits and continuing income and capital returns.

Sponsoring and promoting key research along these lines is one more way Nareit shows how REITs are all about real estate working for you. To stay up-to-date on all of Nareit’s latest research activities, I encourage you to sign up for Nareit’s Research Newsletter.

Matthew Bechard
Editor in Chief

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Twenty Years of Growth

Kyle Gustafson — Thu, 29 Jul 2021 15:21:44 +0000

Twenty Years of Growth Kyle Gustafson Jul. 29 2021

Matthew Bechard

mbechard@nareit.com

Twenty Years of Growth

As much as I have changed over the last two decades, the REIT industry has undergone an even more dramatic evolution.

This summer marked my 20th anniversary at Nareit. When I was first hired as editor-in-chief of this magazine’s predecessor, Real Estate Portfolio, I had a (nearly) full head of hair, no children, and the most famous landlords I knew were Mr. Roper and Mr. Furley.

As much as I have changed over the last two decades, the REIT industry has undergone an even more dramatic evolution. When I joined Nareit, REITs were primarily considered an alternative asset class with a small and dedicated investor base. The REIT industry was comprised of 191 primarily smaller-cap companies and had a total equity market capitalization of $145 billion.

Fast forward to today, and REITs have become part of the investment and retirement portfolios of 145 million American households. The industry’s total equity market capitalization has skyrocketed to nearly $1.5 trillion. Of the 221 publicly traded REITs, 150 have an equity market capitalization in excess of $1 billion. The largest REIT in the world, American Tower Corp. (NYSE: AMT), is nearly as large ($113 billion market cap) as the entire REIT industry was 20 years ago.

The transformation of the industry over the past two decades to adapt to changes in the economic and social landscape in our country has given rise to the creation of separate sectors or sub-sectors for infrastructure, data center, timberland, and single-family home rental REITs. Indeed, two REITs featured in the current issue, STORE Capital Corp. (NYSE: STOR) and Uniti Group Inc. (Nasdaq: UNIT), were both formed after 2010.

Matthew Bechard, Editor in Chief

Not only has the industry expanded in terms of overall size and proliferation within the investment landscape since 2001, but I have been fortunate enough to watch it reach new heights and prove its mettle during some challenging times.

Shortly after I joined Nareit, the first REITs were included in the S&P indexes. There are now more than 120 REITs included in those indexes. Equally important in terms of expanding the sector was the 2016 creation of Real Estate, comprised predominantly of publicly traded REITs, as the 11th headline sector within the Global Industry Classification Standard.

The REIT expansion has not been confined to the U.S. The global listed REIT market has risen to 40 countries and counting. The REIT brand is now present in all G7 countries as well as emerging markets around the world.

The proliferation of REITs over the past two decades has been even more impressive when you consider it happened amidst two epic black swan events. The global financial crisis in 2007 and 2008 was the most severe economic recession to hit the U.S. since the Great Depression. When REITs proved their resiliency through that downturn, many within the industry thought that would be the most difficult cycle they would face.

Well, it was, until COVID-19 brought a worldwide double-edged economic and health crisis unlike any seen before. While this crisis is far from over, the REIT industry is once again showing its value, adaptability, and importance to investors, the economy, and communities. I look forward to seeing what the next 20 years have in store and how REITs will continue to evolve and transform.

Matthew Bechard
Editor in Chief

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The Road Ahead

rich@richgarcia.com — Mon, 14 Jun 2021 01:31:53 +0000

The Road Ahead rich@richgarcia.com Jun. 13 2021

Matthew Bechard

mbechard@nareit.com

The Road Ahead

As we move toward the midpoint of 2021, much of the REIT industry has begun to shift from resilience to resurgence.

As we move toward the midpoint of 2021, much of the REIT industry has begun to shift from resilience to resurgence. The continued rollout of effective vaccines and ongoing positive health trends related to COVID-19 are bringing more employees back to the office and encouraging consumers to travel, shop, and get to back to many of the ways they utilized REIT-owned real estate before the pandemic.

In this issue of REIT magazine, a panel of five leading economists discuss their expectations for the broader economic recovery and how that will impact the commercial real estate industry. In the same way that individual sectors and regions were affected differently throughout the past year, so too will there be variations in the path of the recovery.

As Penn State University’s Eva Steiner says, “In the short run, there’s a bifurcation where some property types have healthy fundamentals and others that rely heavily on in-person interaction are struggling. In the long run, the pandemic is an anomaly, and properties whose values currently may seem depressed are likely to regain their potential once the restrictions can be safely lifted.”

As the economy stabilizes and investors gain insight into the pace of recovery, real estate professionals expect to see an uptick in REIT transaction activity in the second half of 2021. In the feature “On the Move,” several real estate investment professionals discuss their outlook for mergers and acquisitions, privatizations, and initial public offerings in the REIT space for the remainder of the year.

Matthew Bechard, Editor in Chief

To that point, shortly before this issue went to press Kimco Realty Corp. (NYSE: KIM) announced it was acquiring shopping center REIT peer Weingarten Realty Investors (NYSE: WRI), Realty Income Corp. (NYSE: O) said it had agreed to acquire VEREIT, Inc. (NYSE: VER), and Equity Commonwealth (NYSE: EQC) agreed to buy Monmouth Real Estate Investment Corp. (NYSE: MNR). Each of these M&A transactions reflect longtime REITs looking to combine portfolios and grow their scale to take better advantage of strategic opportunities and prepare for future growth.

Speaking of seizing opportunities, I want to make sure you read our interview with business titan Robert L. Johnson, founder and chairman of The RLJ Companies, LLC, and the founder of Black Entertainment Television (BET). Johnson, who notably became the largest Black hotel owner when he and Thomas Baltimore founded what became lodging REIT RLJ Lodging Trust (NYSE: RLJ), discusses the origins of his success, the impetus behind his business strategy, and how corporate America needs to tackle systemic racism. Within the article you can also find links to the full audio interview and video excerpts from our discussion.

Matthew Bechard
Editor in Chief

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A Staggering Year

Kyle Gustafson — Thu, 08 Apr 2021 18:21:59 +0000

A Staggering Year Kyle Gustafson Apr. 8 2021

Matthew Bechard

mbechard@nareit.com

A Staggering Year

The past 12 months have been an unprecedented time in our country’s history. The tragedies and suffering wrought by COVID-19 can never be forgotten.

The numbers are staggering.

Nearly 30 million Americans have tested positive for COVID-19.

The numbers are widespread.

Half a million Americans have died from COVID-19.

The numbers are heartbreaking.

More than 100,000 small businesses have permanently shut down during the pandemic.

The numbers are continuing.

Nearly 10 million Americans are still unemployed as a result of the pandemic.

And that is just the toll this pandemic has had on the U.S. The global numbers are even more unbelievable. When you continually see statistics like the ones above it is hard not to become numb to the overall health and economic devastation wrought by COVID-19.

Seeing images of the late February candle lighting vigil in Washington, D.C. commemorating the lives lost due to COVID-19 was a stark reminder that behind all of those numbers are real people and families.

I realize I have been extremely fortunate throughout this pandemic. My immediate family has stayed healthy. I have remained employed. The pandemic has certainly changed many things for my family, but compared to so many others those changes have been merely alterations to our daily routines or inconveniences.

As difficult as the last year has been, and to be sure we are far from being out of the woods, there are signs of hope. The hospitalization and death rates continue to move in the right direction, especially in some of the hardest hit parts of the country. The continued rollout of effective vaccines will not only slow the spread of COVID-19 but help people safely and confidently return to their pre-pandemic lives.

Matthew Bechard, Editor in Chief

REITs and real estate owners have played an important role across the country throughout the pandemic. Working to support tenants, employees, local companies, and their communities, REITs have responded to local needs to help people weather the storm.

We know so much more about the virus now than we did a year ago, but uncertainty still remains and vigilance is still needed. But our nation now has a path forward to rebuild from COVID-19. REITs, for their part, will play a key role in, building and improving the country’s infrastructure, and providing safe and accessible structures for the economy to recover.

The past 12 months have been an unprecedented time in our country’s history. The tragedies and suffering wrought by COVID-19 can never be forgotten. But we are a nation that adapts. We adapted to a socially distant world, and we will once again adapt to a world where we interact face-to-face with one another at our homes, our work, and in our leisure time. And REITs, and the 516,000 properties they own and operate will play a key role in bringing America back together.

Matthew Bechard
Editor in Chief

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Building Tech

Kyle Gustafson — Tue, 09 Feb 2021 20:30:18 +0000

Building Tech Kyle Gustafson Feb. 9 2021

Matthew Bechard

mbechard@nareit.com

Building Tech

Matthew Bechard, Editor in Chief

Technology is simply defined as the application of scientific knowledge for practical purposes. Technology comes in many shapes and sizes and continually evolves as the science advances to meet increasingly complex problems.

The printing press, internal combustion engine, optical lens, and telephone are a few of the most important technologies ever developed—and ones we take for granted today. But without those innovations many of the cutting-edge enhancements we see today in communications, travel, medicine, and other industries wouldn’t be possible.

While the real estate industry is seldom thought of as a hub for technological innovation, technology has always played a crucial role in the design, construction, and operation of the built environment. REITs across all property sectors are now utilizing and advancing technology more than ever. The rise in “PropTech” and the resultant influx of capital has helped drive those innovations.

The “Talking Tech” feature in this issue highlights five REIT executives charged with setting the technology agenda for their companies. Whether it is expanding operational efficiencies or effectively utilizing data and analytics, technology is integrated across company operations to help the business run more efficiently and improve the bottom line.

COVID-19 only heightened the importance of technology as real estate companies had to adapt to operating properties amidst quarantine. Cloud-based systems and contactless customer and tenant interactions were just some of the technologies already being used that were accelerated in 2020.

Going forward, technology will play an essential role in the development and operation of healthy buildings, which will be essential to getting workers, customers, and other occupants back to their normal activities.

Harvard University’s Joe Allen, author of Healthy Buildings: How Indoor Spaces Drive Performance and Productivity, discusses in this issue’s “DNA of ESG” column how the misperception that operating healthy buildings is too expensive has changed as a result of the pandemic to now being an essential cost of doing business and ultimately a differentiator as tenants sign leases.

The benefits of improved building performance are “massive,” Allen says, because now human health and performance are being integrated into the cost benefit analysis, whereas before they were considered simply as costs.

Any conversation about technology’s impact on real estate must also mention the impact real estate has on technology. Properties owned by data center, wireless infrastructure, and industrial REITs are fueling the growth of the 21st century economy. REIT veteran Bruce Duncan, CEO of CyrusOne (Nasdaq: CONE), discusses the opportunities he sees for the data center REIT.

The examples discussed in this issue highlight just some of the many ways technology is helping to shape how real estate is designed and used in a post-pandemic world. REITs will continue to be at the forefront of those efforts as the benefits to shareholders, tenants, employees, and communities become increasingly clear.

Matthew Bechard
Editor in Chief

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Adapting and Enduring

os@interactivestrategies.com — Thu, 19 Nov 2020 01:00:00 +0000

Adapting and Enduring os@interactive… Nov. 18 2020

Matthew Bechard

mbechard@nareit.com

Adapting and Enduring

Among everything else, 2020 has been a year of forced adaptation.

There are a lot of ways to describe 2020, most of which are not suitable to print in this magazine. But among everything else, 2020 has been a year of forced adaptation.

There are very few things that remain unchanged compared to life pre-pandemic. Obviously, our work environment has shifted dramatically. Those of us fortunate enough to be able to still work have done so in part or entirely remotely, with social distancing guidelines making face masks and Zoom calls normal parts of the work day.

The same applies to students and teachers, who have dealt with a fundamental shift in what it means to “go to school.” If you haven’t listened to an elementary school music class taught virtually, consider yourself fortunate.

Of course, the ways in which we have adapted go well beyond work and school. Travel, shopping, dining, sports, voting, and countless other activities are either being paused or done in different ways.

REITs, as the owners and operators of more than 516,000 properties in the U.S., are at the forefront of adapting how real estate is used during and after this pandemic. Whether it is improved air filtration systems in office buildings, virtual tours for apartment buildings, or a variety of sectors implementing technology enhancements for tenants to be able to deploy, REITs are doing their part to help ensure the places where we work, live, and spend our leisure time are operating as safely as possible.

This ability to adapt to an evolving U.S. economy and political environment is part of the REIT industry’s DNA, and has been so since they were created by Congress 60 years ago. Over the years, REITs have evolved into additional property sectors as real estate needs have emerged. Most recently, REITs across the infrastructure, data center, and logistics sectors have helped support the proliferation of e-commerce and the rollout of advanced wireless communication networks.

While housing the economy, the REIT approach to real estate investment has also served as an important component of diversified investment portfolios for six decades. In light of the current economic climate and aging population, the stable income provided by REITs has taken on even greater importance, particularly in our nation’s recovery. Currently, more than 145 million Americans live in households with REIT investments through their 401(k) and other investment funds.

We all hope 2021 marks a return to an environment with less uncertainty, economic recovery for all people, better health for our communities, more inclusivity in our culture, and lasting positivity in our country. But no matter what challenges or opportunities lie ahead, the past six decades have shown that REITs will be there to help us adapt and enhance our daily lives.

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Finding the Right Ingredients for REITWorks

os@interactivestrategies.com — Wed, 16 Sep 2020 20:45:00 +0000

Finding the Right Ingredients for REITWorks os@interactive… Sep. 16 2020

Matthew Bechard

mbechard@nareit.com

The Right Ingredients

REITworks is here to serve as a well-balanced recipe for moving the real estate industry forward.

At the very beginning of the COVID-induced quarantine, my wife had a Newfoundland-induced accident. Our very large dog got a little too excited about chasing a rival squirrel and caused my wife to fall down the stairs, breaking several bones in her foot.

The squirrel got away unscathed, but my wife had to have surgery and has been out of commission ever since. Among the many physical and emotional drawbacks this has caused, the worst for my whole family may be that they have had to endure my cooking.

My wife is a great cook. I am…not. But I am fairly reliable at following directions, so I have become dependent on online recipes.

A teaspoon of salt. A quarter stick of butter. A tablespoon of turmeric. Before this, I couldn’t have even told you what turmeric was, let alone the flavor it adds to a chicken and broccoli stir-fry.

I have developed a deeper respect for the role each ingredient plays in creating a successful dish.

That is the same sentiment behind the development of Nareit’s newest meeting, REITworks. The virtual event, which takes place Sept. 21-22, combines the three key ingredients that go into creating a comprehensive ESG platform—environmental stewardship, social responsibility, and good governance—into a single event.

Previous events hosted by Nareit focused on one specific aspect of ESG targeted to a select group of industry professionals. Whether you attended Nareit’s SFO Forum, HR Forum, ESG Forum, or Dividends Through Diversity & Inclusion Forum, REITworks has all of the content you have feasted upon in the past, and more. REITworks focuses on how all aspects of ESG interact, complement one another, and merge to best move the company and industry forward.

REITworks is open to all interested professionals. The topics of focus at REITworks affect many different roles within the real estate industry and will cover both a tactical and strategic perspective. Attendees’ job functions will include human resources, accounting, C-suite executives, finance, sustainability, investor relations, legal, operations, asset management, and more.

The wide range of professionals will be discussing important topics ranging from evaluating REITs as a sustainable investment and managing for climate-related disclosures to promoting racial diversity in the industry and how ESG strategies evolve post-COVID-19.

These are just some of the many front-burner issues related to ESG that REITworks is here to serve as a well-balanced recipe for moving the real estate industry forward.

2020: The Year of Tough Questions

os@interactivestrategies.com — Fri, 31 Jul 2020 18:30:00 +0000

2020: The Year of Tough Questions os@interactive… Jul. 31 2020

Matthew Bechard

mbechard@nareit.com

Tough Questions

Just assuming lessons are being learned is not enough, and the introspection and the hard questions triggered by the murder of George Floyd are just a small part of curing the systemic racial injustice in this country.

I grew up as an incredibly curious latchkey kid in an upstate New York suburb in the days before the internet. I had a lot of time alone and limited resources to find the answers I needed.

I learned water is a crucial ingredient in cooking spaghetti after an unfortunate kitchen fire incident. How many kites does an 8-year-old boy need to be able to fly off the roof? That one I never found the answer to, but I did learn how casts were made.

Since March, my three kids have been about as far from latchkey as they can get. That was great at first, especially being able to witness first-hand how resilient children can be.

Their switch to online learning—no problem (unless the wi-fi is slow). No play dates or hanging out—hello video chats and live streaming. Extracurricular activities shut down—my little ninja warriors started climbing trees and running hills in the backyard.

You went to the grocery store; how do you know you didn’t catch the virus? How can we ever go to school and not be around everybody? Why can’t we visit grandma and grandpa? How do you know if someone else has COVID if you don’t even know their name? And those were the easy questions.

At the end of May, a whole new series of questions emerged that, quite frankly, should have been addressed long ago. Why did they kill that man? Why are so many people upset about a man they didn’t know? Why are we going to a protest if we aren’t Black? What is white privilege? Are we racists?

These were not easy questions to answer, but I was grateful to be home to have these discussions. I always assumed by living and acting in a certain way I would set a positive example for my kids and they would grow up to be good, decent people.

But that is no longer enough. Just assuming lessons are being learned is not enough, and the introspection and the hard questions triggered by the murder of George Floyd are just a small part of curing the systemic racial injustice in this country. There are monumental strides required to keep the movement for racial equality and equity moving forward; looking inside ourselves and talking with our kids is one small step we all can do.

If we don’t, the consequences will be far worse than jumping off the garage with nothing but two cheap kites between you and the driveway.

Green Street Sees Increased Online Retail as Tailwind for Industrial REITs

os@interactivestrategies.com — Wed, 17 Jun 2020 21:00:00 +0000

Green Street’s Pierre Rigaud says positive effects of the COVID-19 pandemic could include short-term and long-term growth prospects for the industrial sector.