Real Estate Leadership Guides 6 DEBT & EQUITY CAPITAL EDITION 2019
2019 Debt & Equity Outlook
BY ERIKA MORPHY
APPETITE FOR +
Cheap debt has become the lifeblood
of the commercial real estate capital
markets, but the caution signs ahead
should not be disregarded
It is a gross understatement to say that industrial is a hot asset class right now and that, subsequently, financing for this category is flowing fast and furious. But Clifford Booth, CEO of the Dallas-based Westmount Realty Capital, has his own
approach to the industrial market. In his particular niche, he finds that capital sources—
namely on the equity side—are getting a bit skittish. Instead of investing in the large
distribution centers that can accommodate the Amazons of the world, Westmount is
focusing on multi-tenant light industrial properties in secondary urban markets—
properties that are often seen as obsolete or having a limited use.
Booth, though, doesn’t subscribe to that theory; he says these buildings appeal to a
wider range of tenants. Not all companies need high ceilings or other upgrades. “Our buildings are much less about the rapid velocity of turning goods around, but more about touching the goods and doing some kind of value add,” he relates.
The problem, Booth says, is that not all equity sources understand this business case and
he often has to embark on a crash course to educate them. They especially don’t understand
it when these facilities are located in markets like Milwaukee, Indianapolis or Columbus, OH.
The bigger issue is that lenders, anticipating an end to the cycle on the horizon, are fleeing
to quality. As a result, Booth says a lot of equity providers are moving into the debt space and