What’s the Latest on Commercial Real Estate?

A couple of our Investment Research Analysts attended REITWeek® 2017: NAREIT’s Investor Forum® in early June. They joined other institutional investors who were gathered in New York City to gain insights from NAREIT* Corporate Members about opportunities in the U.S. commercial real estate market. In total, there were 130+ company presentations. A few noteworthy takeaways emerged.

Good Setting for One-on-One Meetings: As part of Fenimore’s steadfast investment process, it’s very important that we get to know company management as well as possible. Each year, our analysts find that NAREIT’s Investor Forum® is a good setting to meet with corporate leaders. In fact, they had face-to-face meetings with three of our holdings’ CEOs and discussed key business topics along with operational assessments. They also spoke with many other businesses.

What a Difference a Year Makes: The main change from last year is the current concern about retail real estate. We see this all around us as retail customers make a seismic shift from buying certain products at brick-and-mortar stores to online. As a result, there is angst that retail tenants will not be able to pay their rent and this has negatively impacted the stock prices of REITs focused on retail clients.

Solid Environment: No one knows what tomorrow will bring, but commercial real estate is doing well overall. Interest rates are low, financing is readily available, occupancy rates are high, and rent levels are good.

* “NAREIT®, the National Association of Real Estate Investment Trusts®, is the worldwide representative voice for REITs, or Real Estate Investment Trusts, and publicly traded real estate companies with an interest in U.S. real estate and capital markets.”

Please see Fenimore disclosure.