RCA in the commercial property press:

Grubb & Ellis Recommends Listed Industrial REITs Get Creative When Searching for Yield

Ctiybiz Real Estate reports: Due to rapidly increasing competition for viable assets in the nation’s best markets, a recent report put out by commercial advisory firm Grubb & Ellis Co recommended that listed industrial REITs begin to look elsewhere when seeking to invest in their target sector. Alternatives might include investing abroad, or even resuming speculative development, which would open up new frontiers for constrained US industrial players.

Grubb & Ellis cited data aggregated by Real Capital Analytics in evaluating current market conditions and making its recommendation. In the nation’s primary and secondary industrial markets, “private non-traded REITs are paying 6.5 percent to equity investors and less than 5 percent to debt holders. At 50 to 60 percent LTV, private REITs can buy 5.75 percent yields and still cover costs of capital, including fees.” The report added that primary and secondary markets account for nearly two-thirds of all US transactions, and cap rates for assets in those markets are hovering around their 2007 record, or in some cases, even beating them.

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Posted by: Nina Turner

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