Mortgage Bankers Association, have
applauded the action, which many
believe will help stabilize the capital
markets.
In fact, Moody’s Investors Service
deems the reauthorization as a positive
development for the US CMBS market.
In a statement commenting on the legislation, the New York City-based ratings
agency’s senior vice president, Daniel
Rubock, states, “TRIPRA will continue
the federal backstop’s five-year record of
making terrorism insurance broadly
affordable and available, while bringing
increased certainty to commercial real
estate lending through its relativity
longer-term tenure.”
holdings at any price—including whatever REIT holdings they have—to obtain
desperately needed funds that they can
no longer get through debt financing,”
the New York City-based executive
explains.
The National Association of Real
Estate Investment Trusts also weighed in
on the issue. The organization relates
that the lack of liquidity in the credit
markets and fears over a potential recession have caused many investors to shift
away from real estate, including REITs.
As a result, the FTSE Nareit All REITs
Index posted its first negative returns,
down 17.8%, since 1999. Comparatively,
the S&P 500 index was up 5.5% for the
year, the Dow Jones Industrials rose
6.4%, the Nasdaq was up 9.8% and the
Russell 2000 was down just 1.6%.
While REITs delivered negative total
returns last year, Nareit says the stocks
still offer more value to income
investors. The FTSE Nareit All REITs
Index saw a dividend yield of 5.3% last
year compared to the 4% yield posted
Community Investment Mezzanine Fund, LP
Fear of Recession
Clouds REIT Outlook
REIT stocks are expected to continue
their downward spiral, at least for the
first half of 2008, according to Citigroup
Global Markets’ Jonathan Litt. In Citi’s
2008 REIT outlook report, the New
York City-based
analyst forecasts
total REIT returns
will remain flat or
decline 10% due to
fears of a possible
recession and continued disruption in
the credit markets. WIMMER:
Last year, REIT “We don’t see
stocks were down anything that’s
16%. going to have
The analyst cut a significant
the ratings on six negative impact
stocks. AvalonBay on REITs.”
Communities Inc.,
Camden Property
Trust, Duke Realty Corp. and Realty
Income Corp. were downgraded to ‘sell’
from ‘hold,’ while General Growth
Properties Inc. and Kilroy Realty Corp.
were lowered to ‘hold’ from ‘buy.’
One reason for the underperfor-mance is that REITs are falling out of
favor with investors, notes Litt. More
than $9.3 billion in funds exited the sector between January and November
2007, and it’s still possible to see additional outflows, given the favorable valuations and growth prospects in the
broader market.
Chris Wimmer, a vice president and
senior analyst on Moody’s Real Estate
Finance team, says investors are also
pulling money out of REITs because
they need to access funds. “Because of
the credit crunch, various investors are
forced to raise capital and they’re selling
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