Unsecured Market Grows for REITs

SAN DIEGO-With wide-open access to equity and debt this year, some analysts say there is too much capital being raised for REIT investment, according to a panel this week on capital markets during NAREIT’s REITWorld trade conference here. The panel, moderated by Edward Walter, president and CEO of Host Hotels & Resorts Inc., revealed that inexpensive debt is causing more borrowers to fill in the spaces with equity and unsecured debt, and product is being priced aggressively.

Panelist Michael Graziano, managing director of Goldman Sachs & Co., said the unsecured market debt is so strong that the “faucets could not be more open right now. REIT spreads have come in via corporate spreads,” bearing out unprecedented numbers, and investors are looking at how much they can prepay.