REITs Make Hay While the Sun Shines

“REITs are adopting a lessons-learned approach by bolstering cash reserves,” sys Steven Marks at Fitch Ratings. (Photo: REIT.com)

NEW YORK CITY—REITs made a strong fundraising comeback in the second quarter after a shaky start to 2016, leading to meaningful improvements in their liquidity profiles, Fitch Ratings said Friday. The median liquidity coverage ratio for select US equity REITs is 1.7x for the 18 months that began July 1, as coverage for each major property type increased 20% or more from the prior year, according to Fitch.

It’s a case of making hay while the sun shines, though, as Fitch sees real estate trusts preparing for the eventual market contraction. “REITs are adopting a lessons-learned approach by bolstering cash reserves, reducing revolving line of credit balances and consciously spacing out debt maturity schedules to prevent any near-term shocks,” says managing director Steven Marks.