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Matt Bechard

Joining me today is Jason Easterly, Managing Director and Denver Regional Leader with Stout. Jason, thanks so much for joining us.

Jason Easterly

Thanks for having me, Matt.

Matt Bechard

The last few years have been an interesting time for the public markets and the economy in general. How would you describe the overall health of the listed REIT market as we head into the second quarter of 2024?

Jason Easterly

I think the overall health is good. Where the challenges have been, of course, where we see in the listed markets anyway, is really sort of a miscorrelation between net asset values and where those REITs are trading. So the challenges are going to continue to include having the retail investor come back to the market, come back to the industry and underwriting challenges, which, of course, we’ll touch on here in a minute. Just making sure that we’re seeing a correlated price for those share prices to really know what the underlying values of those REITs are.

Matt Bechard

And what changes are you seeing regarding real estate valuations?

Jason Easterly

Being a real estate valuation guy myself, the biggest challenge we’ve had is trying to understand what values are. And I know that’s somewhat of an over simplistic answer, but with lack of transactions, those data points just aren’t readily available. So we certainly have to get more creative in finding, analyzing, and understanding those data points. And then it is really a matter of making sure that we’re collaborating with our clients in the appropriate way to understand the nuances of their properties, the things that we might be missing, and understanding their underwriting process so that we can really get to what we think are reasonable and supportable values.

Matt Bechard

And finally, as you look to 2025 and beyond, what are some of the issues facing the REIT industry that might not be top of mind right now?

Jason Easterly

Sort of touching on what we talked about a minute ago, where those listed REITs are, there continues to be a miscorrelation. I think the retail investor doesn’t fully understand what’s baked into the values of those real estate assets. They see interest rates and lack of transaction activity and unfortunately, the REIT industry bears the brunt of that. At the end of the day, the challenges are gonna be finding where the niche market is for those interest rates, buyers and sellers getting on the same page, and finding the underwriting terms that make sense so that we can start to see the level of transaction activity that we were used to. Not sure we’ll ever get back to the COVID atmosphere, but getting back to a frothy and healthy transaction market.