Industry Leaders Discuss the Future of REITs - REITs@50 Series

It was 50 years ago this year that President Dwight Eisenhower signed legislation that created REITs. To commemorate this anniversary year, a number of noted industry leaders participated in a series of video interviews for REIT.com. In this video, these participants share their thoughts on where the industry goes from here.

Former NAREIT Chair Martin "Hap" Stein, Jr., chairman and CEO of Regency Centers Corp. (NYSE: REG), says the REIT industry is extremely well positioned for the future.

"You have great management teams. You have extremely strong balance sheets," Stein says. "On top of that, you have a track record of many, many years of REITs outperforming pretty much every other alternative investment."

Chris Lucas, managing director and senior REIT analyst with Robert W. Baird & Co., adds that the REIT industry has shown its ability to survive.

"All of those hedge funds that I met with in 2009 who predicted the death of these companies, the 15 percent cap rates and the diminished equity value couldn't have been more wrong," Lucas says. "At the end of the day what we have seen is that these are real companies with a real capital markets appetite that can be filled because investors have an interest in participating in their cash flow."

Going a step beyond that, Rick Imperiale, president and portfolio manager with Forward Uniplan Advisors, says that the listed REIT industry is on the precipice of monumental change. Imperiale says now that REITs weathered the capital markets downturn they are well positioned to capture a higher percentage of investable real estate dollars.

"Over the next decade, commercial-quality public real estate is going to at least double in size," Imperiale says.

Former NAREIT Chair Debra Cafaro, chairman, president and CEO of Ventas (NYSE: VTR), agrees that REITs will increase their slice of the pie, perhaps doubling in the coming years.

"I also expect more capital will flow to the REIT model as a superior model for investing in commercial real estate as we make the story known and investors become more familiar with the advantages the REIT model brings," Cafaro says.

Someone who shares the sentiment that REIT industry will experience significant growth in the coming years is Mike Kirby, chairman and director of research with Green Street Advisors. Kirby says he has long believed that the REIT approach to real estate investment is "flat out" a better way to invest in commercial real estate due to better alignment of interests, lower overhead, better operational skills and higher-quality assets.

Sam Zell, chairman of Equity Group Investments and former NAREIT Chair, adds that the U.S. REIT industry should continue to grow right along with the country as a whole. If the country shows growth then there will be a demand for real estate and REITs will benefit greatly from that, he says.

This video is part of a series of articles and videos centered around the 50th anniversary of REITs in the U.S. Visit REIT.com for additional anniversary coverage and a detailed interactive timeline of the last half century. Also, be sure to read the November/December 2010 anniversary issue of REIT magazine either in print or on REIT.com.