The real estate sector includes companies that own, develop, and manage residential, commercial, and industrial properties. Each of these three real estate segments includes publicly traded real estate investment trusts (REITs). REITs are vehicles that legally allow individual investors to buy shares in real estate portfolios that receive income from a variety of properties. REITs’ key metric is funds from operations (FFO), a measure of earnings particular to the industry. Some big names within the sector include American Tower Corp. (AMT), Prologis Inc. (PLD), and Digital Realty Trust Inc. (DLR). Real estate stocks, as represented by the Real Estate Select Sector SPDR ETF (XLRE), have underperformed the broader market with a total return of -5.8% compared to the S&P 500’s total return of 8.7% over the past 12 months.1 These market performance numbers and the statistics in the tables below are as of May 26. Here are the top 3 real estate stocks with the best value, the fastest earnings growth, and the most momentum. Best Value Real Estate Stocks: These are the real estate stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated. Click to read more at www.investopedia.com.
American cities face an increasingly uncertain future in what is already an uncertain time for when and how to reopen businesses and public spaces during the coronavirus outbreak. Elevated concerns over density and a shift in the mindset about remote work underscore the need to assess what matters most to urban residents. Measuring the value of urban amenities such as arts, cultural activities, recreation opportunities, and overall quality of life and how they relate to a neighborhood’s perception and satisfaction is more important than ever as cities look for a way forward in the post-pandemic future. A landmark Urban Institute report, commissioned by the Knight Foundation, surveyed 11,000 residents across 26 metro areas before the national coronavirus shutdown to understand what determines residents’ sense of attachment and connection to their city or community. It examines the trade-offs people make and the role they think amenities play in their satisfaction of locations. Click to read more at www.forbes.com.
Three tasks can ensure your financing plan is on point when starting a redevelopment project.
The redevelopment of property is crucial to a community’s renewal and economic health. Naturally, commercial real estate professionals are in business to make a profit, but revitalizing a property and turning it into a revenue-generating piece of a neighborhood is a financial benefit to more than just the developer. Before a blighted property can be reinvigorated, though, you need the funds to acquire it. Acquisition can mean more than just taking the title — it can refer to a lease, lease-purchase, land lease, or multiple vehicles.
Projecting Expenditures and Revenue
First things first, in an acquisition, how much money will you need and where will it come from? If your redevelopment project will be 100 percent equity, that’s fantastic. But rarely is it so simple. If you need to include debt, know what you can afford. Click to read more at www.ccim.com.
In cities all over the country, construction sites are shutting down due to the COVID-19 crisis, while others are taking steps to limit exposure as work continues. Regardless of the tactic—sustained operations or stoppage— ignoring specific risks can lead to serious cost and project management implications. For sites that are continuing construction during the pandemic, the contractor should establish several measures to mitigate the spread of the disease. The first step is to limit exposure before anyone even makes it onto the property. Many sites now require a temperature check of anybody entering the site, as well as when they come and go, including upon return from lunch or break. Other sites are asking workers—either verbally or by signing a form—if they, someone in their household or someone they may have been in contact with is exhibiting symptoms of or is confirmed to have contracted COVID-19. The most effective weapon against the disease is social distancing, but that can be hard to maintain on an active work site. Some contractors are juggling their teams with shifts so that there are fewer people on site at any one time, but the project can still move ahead on schedule. Click to read more at www.rednews.com.
The pandemic shut down nearly all sectors of the economy but now, Texas has started to open back up. But it’s not like flipping a switch—there are countless property management considerations before, during and after the return of commercial tenants to their spaces. REjournals recently hosted a webinar addressing this very topic, bringing together three strong Houston CRE voices. Participating in the webinar were Shawn Harvey, managing director of integrated services at Lee & Associates; Hunter Lane, vice president of Lane Property Tax Advocates and Robert Tyler, CPM, senior general manager at JLL. The panelists dove right in discussing the early conversations they are having with clients who are unsure of how to proceed. Their initial concerns surrounded the health of the people coming to the building. After that, unsurprisingly, is the current and future impacts to rental income. “Early on we had a few tenants come in saying they were going to have difficulty paying rent,” said Harvey. “Once you start asking more in-depth questions, a lot of them backed off.” Click to read more at www.rejournals.com.
The world’s biggest real estate investors are sitting on piles of cash, preparing for once-in-a-lifetime opportunities created by the pandemic. With economies around the world sputtering, commercial real estate prices are expected to come down. How much they’ll fall is the key question.Sellers are currently willing to concede discounts of around 5%, while bidders are hoping for about 20% off pre-pandemic prices, said Charles Hewlett, managing director at Rclco Real Estate Advisors. That estimated gap, which is likely wider in specific cases, has put a freeze on deals. “The mantra for anything that hasn’t gotten started is delay, defer, and in many cases, renegotiate,” Hewlett said. “If I’m going to have vintage May 2020 on my books, I want to be able to demonstrate to my investors that I got an exceptionally good deal.” Dry Powder: Private equity firms across the globe hold an estimated $328 billion in dry powder for real estate deployment, according to the data firm Preqin Ltd. Prior to the crisis, asset prices had been pushed up as investors chased yield in riskier corners of the property market. Now, Blackstone Group Inc. and Brookfield Asset Management Inc., the largest real estate investing companies, are expected to hunt for bargains among the fallout from the pandemic. Click to read more at www.bloombergquint.com.