Excellent access to capital, good liquidity and strengthening commercial real estate fundamentals continue to stabilize the outlook on the U.S. REIT sector, says Steven R. Marks, a Managing Director at Fitch Ratings Ltd.
“Having this strong access to capital has enabled REITs to have good liquidity positions,” he said. “Further to the stable outlook has been that commercial real estate fundamentals at the property level have varied across sectors, but have generally been within our expectations.”
Marks puts Simon Property Group Inc. (SPG), which focuses on retail properties, at the higher end of the ratings scale of U.S. REITs in his coverage universe. He says he likes SPG because of its low leverage, conservative management and good liquidity.
“In terms of retail, we revised our view on the fundamentals for retail across the entire retail sector to stable,” Marks said. “It’s actually been the one property type where we’ve been surprised at how consistent the performance has been, at least for the last year, and we expect that the performance is going to be certainly not gangbusters, but somewhere between 0% to 3% same-store NOI growth.”