MIAMI—Does ample capital exist for both debt and equity investment? Where do we stand with alternative capital?

GlobeSt.com caught up with Jeff Reder, senior vice president of Private Real Estate for CenterSquare Investment Management, to get his thoughts on the pricing question in this exclusive interview.

“While valuations do appear full in many markets, fundamentals are still strong,” Reder tells GlobeSt.com. “While the stronger 'bounce back' recovery growth from the depths of the downturn is behind us, tailwinds for continued positive momentum remain.”

Reder says he and his colleagues see particularly compelling opportunities in the execution of value-add strategies. Specifically, he's pointing to value-add strategies transform underperforming assets to meet the specific demand requirements driven by current secular and technological changes.

“Increases in interest rates combined with modest inflation will favor assets with vacancy or short term rollover, rather than long-term, flat leases,” Reder says. “Moreover, despite the fact that LIBOR will likely continue to increase, debt will remain relatively attractive as spreads continue to contract.”

As Reder sees it, ample capital exists for both debt and equity investment, with an increasing amount of alternative capital transitioning to debt due to cycle and valuation concerns. However, he offers an “however.”

“The increased volume and competition in the debt space will likely provide an abundance of attractive financing which will serve as an additional tailwind for valuations,” Reder says. “Large institutional investors will rebalance their portfolios following a significant run up in equities. Real estate will remain an attractive opportunity, particularly compared to bonds, for asset reallocation providing additional capital to the real estate sector.”

(Find out why we may see more multifamily portfolio sales in 2018. And a multifamily asset in one of the highest Google search zip codes just traded hands. Get all the details.

Instant Insights /

Jeff Reder Answers the Infamous 'Pricing Question'

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