Stout's Perspective on the REIT Market at REITwise 2022
Stout's Perspective on the REIT Market at REITwise 2022
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Matt Bechard
Joining me today is Jason Easterly, Managing Director, Valuation Advisory, and Denver Office Leader with Stout. Stout has more than 30 years of experience in corporate finance, valuation, financial disputes, and investigations. Can you talk about how you serve clients in the commercial real estate industry?
Jason Easterly
Certainly. So, typically we provide ― within our real estate practice ― valuation and advisory services for REITs, anything from financial reporting matters, investor reporting matters, and tax reporting matters, that sort of thing.
Matt Bechard
And as we continue to emerge from the pandemic, are there any material changes that you have seen in the real estate market or valuation industry as a result of what has been going on the last two years?
Jason Easterly
Absolutely. We have obviously seen ― and I think all of us have been affected by the shift in how we work ― the office space industry has been dramatically affected. I think we are still trying to understand the ramifications to the retail space, so your traditional malls and things like that. We are going to see how we emerge from that; we simply don’t know yet. And so there have been some dramatic shifts in those two arenas. From a valuation perspective, early on in the pandemic, we were unable to look at property. Frankly, in-person visits to those properties were not a possibility, so we were affected by that. And then just the monumental shift of cap rates and rents across the industrial and multi-family spaces.
Matt Bechard
Finally, what are some other challenges that you are seeing that we might face in the real estate industry over the next few years?
Jason Easterly
So we are all aware of interest rates on the rise; we’re not yet sure how this is going to affect us. I think we can look back historically and understand the effects that rising interest rates have had on real estate. But there is still a ton of capital that’s flooding the market, so I think that that is likely offsetting ― at least in the short run ― the effect of rising interest rates. Then one of the questions earlier that I alluded to: How are we going to work in the future? So what does that mean for office space? What does that mean for traditional retail? Will we continue to see the challenges in those spaces? And will we continue to see the impacts in the industrial and multi-family spaces that we have seen in the last 24 months?